Sky's stablecoin strategy and why Ethereum still matters to institutions

Transcript

the money is going to flow to where it is it is best spent and that's really the whole that's the point of capitalism fundamentally that naturally ends up with in particular sky but but just projects that fundamentally prioritize delivering real value and especially delivering riskadjusted returns. What's up everybody? It's LG Doo here and welcome to the Milk Road Show, the daily crypto show where I ask the smartest people some of the most basic questions and somehow it works. Today is January 19th 2026. Listen, stable coins are quietly turning into the most competitive financial products on Earth. Not because they're cryptonative, but because capital is finally optimizing for risk adjusted returns. In this episode, I'm talking to Rune Christensen, a legend in the space, the co-founder of Sky and previously Maker

Labs, as we break down why institutional money is drifting towards this decentralized yield like they offer, and how Sky is positioning itself in that shift and plans to stay competitive both in product and in token. Today's episode is brought to you by Bridge. Send stable coin payments instantly simple, global, friction free, and chain link links web 3 to Wall Street. Run, welcome to Milk Road man. >> Glad to be here. >> Okay, let's get right into it, man. Listen, it's Monday. Uh, lots of crazy stuff going on in January. Last week, we were supposed to have the Clarity Act, uh, clarity on the Clarity Act, and instead things got more confusing.

Probably a very important moment for you guys earlier this year was the G or or last year was the Genius Act, uh, being passed. Run, I wanted to ask you, if if stable coin rewards get restricted at centralized value, does that capital immediately flow into DeFi venues like Sky? Is that is that what you think will happen if this bill gets delayed and delayed and people start to look for, you know, really great solutions for yield on their stable coins and other products? >> I mean, obviously, it won't happen immediately, but you're definitely, I would say, directionally correct in the sense that DeFi is exactly the the solution and sort of the natural overflow valve to everyone's frustrations with like gatekeeping and it's bad uh bureaucracy and and outdated legacy systems. So um as a as a sky is a

like a proper decentralized D5 project that's like deep crypto right it's not a it's it's you know it's not like a fintech it's not a a bank doing some tokenization project it's like a proper onchain organization that really gives us some advantages in the sense that uh when you have all this regulation it's all about like regulating how people interact with with crypto and how people interact with blockchain especially when you're coming at it from like a sort of like a traditional normie retail perspective and that just like really helps legitimizing and making the space so much less scary and in turn kind of opening people's mind like opening people's eyes to the possibility of real value like Sky and I so I think that's been like a major part of all our growth

and all the the surge in interest of Sky has just been this legitimacy that's coming to the space now >> so so you're telling me basically that as these as something as the Clarity Act comes to market and hopefully passes at some point that despite that seeming like a win probably for more the more centralized entities. It will bring so many more players into the market and as a result they're going to start to look for for decentralized options like the true ethos of crypto and that's going to come to sky basically. >> Well, I mean no one cares about the the ethos or the true decentralization or anything like that. It's simply it's a like I mean it's just like real crypto done right I guess you could say >> just has a a number of undeniable

advantages including efficiency including transparency and risk management uh that ultimately makes it possible to build fundamentally superior financial products and then yeah it's like I mean it's basically just finance is just a very sort of uh optimizing market right that's going to the money is going to flow to where it is it is best spent and that's really the whole that's the point capitalism fundamentally and that naturally ends up with in particular Sky, but but just projects that fundamentally prioritize delivering this like delivering real value and especially delivering riskadjusted returns, which is really what Sky is, right? It's an engine for the best possible risk adjusted returns. And you're just seeing

more and more of that capital sort of maturing, getting getting to the point where it's starting to to actually understand this and tap into it. And then once it sort of really enters DeFi and and starts interacting with Sky and and the other um products that exist in DeFi, >> it it's not going to leave again because it's a superior way to hold your capital. >> I'm going to pause there for a second. If you're listening to this and thinking, "Okay, but what is the move I should actually be making?" Then going Pro is for you. Every week, our research team drops a full deep dive on the biggest themes everyone else misses.

Plus, you get access to our full Milk Road Pro portfolio that has real-time buy and sell signals and access to our Discord where our analysts will answer any question you have. If you want to level up, honestly, that's where you got to do it. Hit the link below. I want to jump ahead. I know we had a few other kind of industry discussions, but Sky, while we're while we're talking about Sky, um I wanted to ask you, and this is something as more of a a peasant, if you will, that I am, uh I've been curious about for a while, following you guys. Do do you see for Sky in this in I guess the stable coin race? If you see it as a race, I want to know how you frame this are are circle and tether are those competitors for you? Are you trying to

compete with them or are you all kind of like vying for the same pie or is it or is it apples to oranges when we talk about the more centralized stable coin issuers? >> I mean obviously it's all stable coins but yeah I would say it's it's it is as apples to oranges as it gets uh within the category of stable coins. And the fundamental reason is that Sky is a well I was just talking about how it's a real crypto and and decentralized and all that but it's also fundamentally it's a decentralized yield generating stable coin. So what Sky delivers with USDS it's stable coin uh is just the best possible way the best possible form for a user to get a really attractive risk adjusted return. And now the users who care the most about riskadjusted returns

are institutions typically institutions like Wales sort of very sophisticated market participants. But then of course what's really cool with Sky is it also democratizes this. So it also means that if you're like a normal mom and pop business or even just like a regular person saving up money, there's no reason why you shouldn't have access to the exact same best possible financial product as the top uh banks and institutions. And so today, Sky uh backs with USDS the I mean it's the largest decentralized yield generating stable coin in the world. It's the third largest stable coin overall. And this has actually been a very stable sort of situation where that's been the case since the beginning of of stable coins.

It's been USDT, USDC have been the two by far largest and then uh Sky with USDS and the the precursor USS DI has been the sort of third largest but then the front runner on delivering this the true potential of crypto. Um and what's happening now is I mean nowadays there's something like 300 billion in stable coins that is not earning a yield at all mostly sitting in USDC and USDT and that capital wants to earn a yield. That's sort of the nature of of capital and it is that's contributing to the growth uh that's been happening with with Skyrite.

USDS uh essentially doubled uh in supply over the last year. Um and there's only sort of increase in this momentum exactly because the capital is kind of maturing and becoming more aware of how to optimize in this new you know this new blockchainbased market which fundamentally is like you can do a lot more stuff but ultimately it's a financial market just like what uh has always been the case. >> So let me ask you the the the the dumbest most basic question and this is again you know as a as a former DJ is is something that I want to know more about. How do how how and why does a stable coin supply double in a year?

Because you guys are up your your supply of USDS is up 86% in 2025 up to almost 10 billion. How in what circumstance are you issuing new USDS? Like what drives that? Um paint me a little picture there. >> Yeah. So the thing I mean the thing that drives stable and supply is demand and that's because of how they work, right? they sort of increase the supply in order to meet exactly the demand at exactly $1 if it's pegged to a dollar right so the question is why do people want to hold USDs uh and what's interest I mean and well and the fundamental answer is risk adjust return right so you can get a good return and it is highly riskmanaged right so unlike the rest of crypto which is often perceived as the wild west and

you're going to lose all your money and it's going to blow up and so on right sky is a uh it's a protocol with uh more than a sevenyear like with more than seven years of of of a track record of running live. Uh it's just it's the most secure, you know, most battle tested, most technically advanced and uh defended protocol of of anything out there really. And on top of that security, it also delivers a really attractive yield. Though what's interesting is that yield has gone down over the course of the year, right? So the the story with Sky has kind of been sort of slow and steady just delivering the yield. it have been really predictable and uh it's actually been slowly decreasing as rates generally decrease uh and uh and crypto sort of cooled down. But it's just that

reliability uh and the fact that that there's been this sort of stability and and and just sort of this compounding effect of the track record and and the liquidity of the stable coin results it just in more and more of USDS becoming the go-to stable coin of choice for like the really sophisticated actors that that manage capital in crypto and that especially means institutions but also uh like what we call referred to as automated whales like sort crypto whales that actually have such, you know, they're they have setups to manage their funds that are so advanced that they're sort of quasi institutions and they also tend to really favor uh holding their funds with USDs if they don't have some other particular thing to do with it.

>> Who are these whales? This is so this is this is one of the main questions I wanted to ask you is like who who's driving this demand for USDs? And you're kind of you're giving us a kind of like a broad picture, but I want to know like if you're talking about I want to know, you know, are there institutions coming for USDs? Sounds like there are a lot. And also, who are these who are these whales that need this automated system? Like, are you talking about one of those OG Bitcoin wallets that offloaded like $3 billion of their OG Bitcoin a couple months ago and now they're looking for a nice, you know, DeFi focused way to to park it. Is that who you mean that type of person?

>> Uh, I mean, I don't know anything about that. I don't know the particular, you know, the big OG Bitcoin wallet, but it is actually exactly like that could exactly fit that profile. I mean, and some of it is like um sort of famous OG crypto people that uh like hold their >> you know that they made a lot of money trading and then now they want to preserve their wealth and then a good way to do that is to hold the funds in USDS. Uh and then there's also a lot I mean and institutions and also some whales. It's also relates a lot to the fact that USDS it it it gives you that risk adjusted return right now it's 4% you can get with the sky savings rate from holding USDS but it also gives you just complete and instant redeemability like convertability to to USDC through

something called the PEX stability module. So yeah, let me just uh caveat that it's not actually it's not actually redeemability in the sense that it's like a it's it's just the ability to like it just that there is an onchain dex essentially >> that has a huge amount of USDC in it that then trades one to one uh between USDS and USDC right now. Uh there's more than 4 billion USDC available. So if you wanted to, you could literally cash out 4 billion USDs in one transaction, like in one Ethereum block, and you would then have 4 billion USDC. And you have whales actually doing this, right? Like they will literally cash in and out hundreds of millions uh you know, and they will go and farm something for a

couple hours and then they will they will um >> swap back into USDS, right? And that combination of liquidity, security, and then also having a really attractive uh yield. I think that's that's s of that that's what makes it this um you know that's that's what makes it a very popular product amongst those that have really have a you know solid understanding of what are the best things out there and what is uh overall the best choice for given my setup. So, so okay. So, this is this kind of leads me to another question is this is kind you're telling us that that's kind of you know a practical way to use USDS or one of the practical ways to do it. How do you want people to use this in the future? Right. Is is your plan to grow to be the same size you know in in in

terms of stable coin supply as circle and tether? Um is is that kind of the plan as demand comes? I'm assuming yes. But but what what do you want people to be doing in the future? Do you want institutions to be doing these types of transactions that you mean like okay let's just swap $4 billion this to that and then for a couple hours and bring it back. Do you want that to happen every single day on Sky? Is that is that kind of the plan? And if not and if so either one, what does that look like? Yeah, I mean it really is that like I think the dream of crypto is definitely banking unbanked and having lots of of uh sort of regular people and especially disadvantaged people using your crypto >> at this point. Uh I you know I still

hope that will very much happen with Sky USDs because why shouldn't the unbanked get the best possible risk adjust return right but the reality is that it's very it's very costly to do the last mile to like get to normal people as end users right and so the one of the big uh transformations that uh that has sort of led Sky to where it is today since the very early days right when it was founded as as maker and uh it was the original stable coin really the first decentralized stable coin it was very ideological Uh and the big transformation is it turns out that the the perfect user for this system is essentially Trefy itself like and and institutions and large companies and well or small companies,

right? But basically anything where you have a system or a business or process that's trying to optimize its finances, right? So it's trying to to make the best choice in terms of how much risk it wants to be exposed to uh and liquidity it has available and um the yield it's going to get. That's what Sky and USDS is optimizing for. Right. So you would actually expect to see it would be very large organizations are are a natural choice for it and and and just generally businesses and I think also when you see like more AIdriven stuff and more sort of automated businesses and things you know systems that will sort of automatically optimize things for you, they will tend to to choose uh USDS because it it has that it has that sort

of rational optimization itself of being focused on risk adjusted return. I like that. I like that. So, so basically you're positioning this as well and obviously I'm just picking on this AI part that you mentioned at the end that once you have these trillions of dollars on chain looking for basically the best use of the money that USDS is going to be a really obvious once it's going to drive the volume and basically grow the product but and you're basically positioning it as that that it's something that the AIS or whoever's optimizing that will find and say we have to use this. This is the best yield uh that makes the most sense for what we're doing. Yeah, I guess I mean it's the thing you use if you don't know what to do with your money. Like if you're just holding your money if it's like in

between then you want I mean then you have to have it in a stable coin and then the way you would rank if you're sort of just rationally ranking stable coins you would choose the best risk adjusted return. >> Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe. Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge.

Sure, tokenized financial products are the future, but there is a big sticking point. They all need to speak to each other. This is a tough problem to solve, but chain link does exactly that. It's the universal language for financial markets, linking Wall Street to web 3, banks to blockchain, and so much more. see how chain link is linking the world by going to milkroad.com/chainlink. Right. Okay. I want to ask you about Ethereum because obviously this is something you know you've been building on Ethereum uh for the for the whole history of your company. Um is this do you see that at this point in time right as we're seeing a lot of institutions come on chain and some of them are choosing not like other L1s we're seeing I don't know like Canton network gain popularity there's all the you know all these different deals and and and other

solutions they're finding you guys are on Ethereum. Ethereum is the is the the birth of all this stuff is the home is the hometown in a sense. Do you see this going forward? Is that an advantage or potentially a disadvantage going into the future? >> Yeah. First of all, it's it's a funny question because I have been asked this throughout every single cycle, you know, for more years than I can uh remember, right? But >> has your answer changed? Has your answer changed over time before you answer? >> It's um I think it's like it's actually oscillated a bit. So uh it's sort of gone between uh different phases but but right now it's like the the answer this is the most common answer we like the most common view we've had of >> of multi-chain which is currently that

basically it doesn't matter it doesn't matter whe there's activity on what chain is activity >> being based on Ethereum for Sky is not in any way a limitation on being able to be sort of natively doing business and being natively available on any other chain but it does give some advantages because Ethereum has extreme resilience and sort of extreme uh institutional and structural trust. So I think in general that's like it's it's a I mean I think it's a pretty good bet to to to uh rely on projects that have their kind of core their backbone based on Ethereum mainet. Uh but then you know obviously you got to you got to meet the users where they are. So, it's also very important to have multi-chain capabilities and that's something Sky

has yeah spent a lot of effort developing and now has a lot of bridges and and multi-chain capabilities to various blockchains and that's just going to continue to expand and again like be driven by where are the users actually at that's where you know obviously USDS the stable coin but I think even more importantly the the sort of the native ability to earn the yield on the USDS uh can be well is uh being expanded out to many different blockchains. Do you see I mean is ETH if you step out of your role for a second and you just look kind of like the broader market if you can comment on this. Do you feel like ETH Ethereum is doing everything it can to I guess stay competitive going into this really institutional u environment that we're clearly moving towards and these institutions are

looking at other solutions. Do you feel like the Ethereum Foundation everything that's been developed is doing what it needs to or could it be doing more? Should there any things that maybe it shouldn't have done? I want to get your thoughts there. Somebody who's been building there for a really long time. I mean, I think I think there's good progress on the tech. So, I actually think that's all that can be done. Um, I don't think there's any way that you can do BD or any stuff like the big question is like the long-term viability of the the sort of goldness of crypto assets, right? >> Which is just I don't know what to like I mean I think everyone's sort of no one really has an answer for like why is Bitcoin so valuable, right? And and that's also a big part of Ethereum's

value, but it's it's certainly there. And if you look at a at a stable coin like USDS, it's like it has a lot of Ethereum backing in particular. Like Ethereum is like well both based on Ethereum. They're both really interesting because they're very highly liquid. And then Ethereum has this extra advantage that you can also stake it and it has some financial flows to it. >> Okay, that's a that's a good answer. Um let's let's kind of come back to the like uh to discussing Sky a little bit more. I was looking at your State of Sky ecosystem 2025 report. Uh, not only have has your stable coin supply grown 86% last year to 9.86 billion, uh, your annualized protocol gross revenue is up for is is at 435 million. Protocol profits are at 168 million. Run, tell me like what does the future look like for

for Sky from here? What kind of numbers are going to be reading in the same report in 2026 and and what are you guys building going forward? The big strategic expansion of Sky is all based on growing the ecosystem through the Sky agent network which is this network of agents that basically do all the operational stuff that that Sky needs to to expand. Uh and in uh 2025 you had the launch of Spark and the launch of Grove which were two like two of the the the major more well-known Sky agents. And there's just going to be more and more launching in 2026. OPEX is also a major sky agent that launched which itself is

an incubator, meaning that's like an agent creating more agents. And so each of these agents are independent tokenized projects that essentially operate on top of Sky as a platform and then are are capable of expanding the ecosystem, bringing more users in like driving demand for USDS for instance, but also crucially allocating the collateral uh which helps make the system more efficient which helps drive up the the return and actually reduce the risk simultaneously. So that's really the key to how Sky uh gets to this really good risk adjusted return by essentially having a whole network of agents uh competing to optimize the the portfolio and optimizing the risk adjusted return.

>> When did you start working on that? Like when did you make the decision to kind of bring AI agents into the ecosystem? I mean it actually went all it's like four years ago the big uh sort of transformation uh began and the originally it had nothing to do with AI and also it's like we use agent more broadly you can think of them also as economic agents uh where AI is sort of a part of it but there's also a lot of human interaction into it right >> and uh the what started all of it was the realization that the original DAO model had totally failed so there were some really really major issues with with Maker, the uh the the precursor to Sky where having one giant project with

like a giant monolithic governance process was just like horrifically bureaucratic and and broken essentially. It wasn't capable of like simultaneously remaining sort of secure and decentralized while also being able to deliver on business objectives. So by splitting it up into sort of Sky core itself which actually is relatively lean in terms of what responsibilities it has and then the Sky agents uh you're able to separate. You kind of have Sky being the the regulator, the thing that keeps the whole ecosystem secure and safe and and does a risk management and then you have all the Sky agents which are the business uh entities that go out and make business decisions and find that

find users and that can like make all sorts of like you know take risk in different ways and basically uh make make these more operational day-to-day decisions. And it's really important to separate these two problems from each other because you need a completely different culture, right? So if you're regulating and trying to prevent tail risk and you're trying to prevent, you know, everything from blowing up, you're making sure that people's savings are being kept safe, you need to think very differently from somebody that, you know, has to go zero to one and has to have exponential growth and all these things that you want as a as a business and as a startup, right? And it's actually really cool to be able to combine the scale of like a sort of Trefy like a like a sort of very large corporation or something like that with

the the flexibility and the innovation of startups and actually having an ecosystem where this is possible and then you you know on top of that then finally you get to add AI to the mix right which is extremely cool with the the data transparency of blockchain and this internet native uh techn like technology native uh cohort of builders that exist in crypto and sort of bringing it all together. And uh it's it's pretty amazing uh the stuff that's that's in the pipeline and that's going to be coming out over the next couple of years because of all of these, you know, these different technological elements finally being properly mature and now being put together in like really really groundbreaking ways.

>> Is this something that a lot of other DeFi protocols do? I'm not up fully up to date on like my my latest default DeFi developments. Is this do a lot of D5 protocols are they using agents these days or is this largely a sky thing? You guys are kind of leading the way. >> So I would I would think and hope that uh almost all D5 protocols are using AI agents in some shape or form in sort of like the >> I mean the sort of this the standard way that people are starting to adopt AI nowadays. But what Sky does that is completely unique is it basically introduces this new concept of tokenized decentralized agents uh that have this you know that are fundamentally like they're these economic entities essentially that exists within the framework of sky and that's definitely

something that that doesn't exist anywhere else and it's it's like it's like a whole generation ahead I think of how uh people have been thinking about this stuff it ultimately derives out of the concept was called subdows so basically Like this is the problem of like one big giant Dow that tries to do everything that doesn't really work but you can split it up into smaller subdows and then now you can sort of have smaller more manageable pieces actually focus on different challenges. Uh but then we just kind of kept refining that concept further and further and what you end up with is essentially yeah decentralized agents effectively um that can do really really cool things that I think when it really you know when it properly gets out there and people start to really understand what the you know

the system like Spark what that really is and how that really sits in the broader ecosystem there's going to be a lot of excitement around what can be done with this. It's it's kind of like it's almost like inventing the concept of like companies or something like that, but for this new blockchain AI era. >> All right, we'll have to check it out. We'll have to do a deep dive on that on our on our AI podcast and maybe learn a little bit more. Um, last question I have for you, Run, um, is I want to ask you about buybacks. And this is something again I'm not sure when you guys started buybacks, so maybe you could paint a little picture for us there, but it is one of the big highlights for you that you guys did $92.2 $2 million of buybacks last year,

which is tremendous. I'd love to know when was the decision made to to buy back the token and um how do you see that as kind of part of the the competitive strategy for Sky? >> So, uh Maker originally basically invented it. I'm pretty sure Maker is the first crypto project ever to do buybacks and it's just been doing it sort of on and off for the last seven years. So, uh it's always been like a thing. It's always been like a fixed part of the project and then the the concept carried over to Sky when when the Sky launched one and a half years ago. The big difference though with Sky is that the buybacks is no longer like the dominant way to um provide value to the token holder. Uh that really is the

staking rewards. So the main the main reason why people uh buy and hold Sky right now is to stake it. It just uh but it just happened that on top of that then because it's a very advantageous time for the for the protocol to do buybacks currently the staking rewards are all done through the buying of sky tokens and then distributing those sky tokens as staking rewards. So you kind of get the both effects, right? You have a lot of buybacks and you also have a lot of staking rewards. But ultimately, the thing that's going to remain in the long term is a heavy emphasis on the staking rewards, which may transition to just being in USDS because it's a little bit more convenient to just receive cash as your staking rewards, right? While the buybacks will um like they will not

remain they will not necessarily remain as as large scale because the main emphasis is the staking reward. >> That makes sense. So, if you were, so maybe you can paint a picture for me again just as the last question here. A lot of our audience I would say are, you know, long-term holders of crypto assets. They're really into the majors. They probably have a lot of stable coins or they kind of fluctuate between stable coins. If they were to go and look at Sky right now, and it's let's say let's pretend it's their first their first time going to this site. Let's let's just assume that although I'm sure they've been, what what is the what would you say to them is the best way to kind of utilize the protocol? Should they obviously put a lot of their stable coin there? Should we accumulate Sky as

these are these buybacks going to continue? Like what do you want them to come and do? >> I mean, I think that yeah, the most obvious thing is get the Sky savings rate with your stable coins, right? So, if you go to the website, you can go to you can go to Sky Money and then you can launch the app. So, you're on app and then there you can access the savings rate. You could also use Spark.fi, which is one of these um Sky agents that provide an alternative front end. Yeah, I mean the most important thing is really the sky savings rate because that's like that's the if you're holding if you're holding a stable coin that's not paying any yield or if you're using a D5 protocol that's just not you know that's paying let's say paying less yield that you would get in TRFI it's

just really a no-brainer to to get the Sky savings rate instead because it is both highly riskmanaged and it's actually a very attractive return that provides and then yeah I mean I would I mean if somebody's interested in buying Sky it's very important that they stake it Like Sky has a really really high uh it's it's something like 15% stake and reward right now per year. So there's a huge opportunity in in uh buying Sky and staking it and then uh yeah there's also I mean then you can also do things like vote in the system and protect it. >> Okay great well thanks for sharing all that uh run. Thank you for coming on the show and kind of explaining everything to us. I think this is this is a slightly more complex topic than our audience is used to but I think obviously something very important. You

guys are the third largest stable coin out there, growing year-over-year. Um, and we'll be eager to continue monitoring your progress uh going into this new year. >> Awesome. Glad to be here. >> If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why do we build it? Not to make money, just honestly so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap

on Salana all at swap.mmillgrow.com. Check it out today. You won't be upset. And you can join me in my favorite place to make swaps on chain. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road Daily and Pro Newsletters and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.