Sky Protocol overtakes Ethena: USD stablecoin increases supply despite bearish market conditions

Sky Protocol overtakes Ethena: USD stablecoin increases supply despite bearish market conditions

Sky Protocol: Growth of the synthetic stablecoin USD

DeFi protocol Sky Protocol has increased its supply of USD, a synthetic stablecoin, surpassing the supply of Ethereum's USDE. Despite the challenges presented by the Ethereum (ETH) market, the protocol is growing and demonstrating its resilience in a tight market environment.

Supply increase and market dynamics

Sky Protocol has been able to expand the scope of its synthetic stablecoin USD, while Ethena has had to reduce its supply of USDE due to deteriorating market conditions. These adjustments reflect the protocols’ changing strategies, especially during periods of declining market activity. So far, USDE has dominated market activity and held a share of over 46% of the synthetic stablecoin market at the end of 2024, of which the crypto market still has 228.3 billion US dollars in new stablecoins.

The USDE supply adjustment is a direct response to market conditions: in recent months, the USDE supply has been reduced from over 6 billion tokens to 5.4 billion tokens in order to make the protocol ecosystem more robust. Ethena relies on financing fees, which poses additional challenges due to general market developments.

Sky Protocols influence and stability

Sky Protocol, on the other hand, currently has a total of 4.9 billion USDS tokens in circulation, which continue to be traded with DAI. The total supply within the Sky ecosystem is more than 8.4 billion tokens distributed across various use cases and vaults. The diversity of supported protocols and chains has helped USDS gain traction beyond Ethereum in recent months.

Despite a drop in the winning rate to 6.5% – trending below the previous 12.5% ​​– interest in USDD remains high. The Sky ecosystem has positioned itself in the top 10 DeFi projects and could potentially gain further influence in the future with the expanded use of USDD.

Earnings comparison between Sky Protocol and Ethereum

Another indicator of Sky Protocol's market position is the comparison of revenues with Ethereum. While Ethena saw a decline in weekly revenue last year from over $21 million at the end of the year to around $3 million in the first quarter of 2025, Sky Protocol achieved over $13 million in weekly fees in December and has maintained stable revenues of over $8 million since then.

The current challenges in the DeFi sector affect many protocols fighting for attention and liquidity. Although the Ethereum market itself is under pressure, the MKR token is showing signs of recovery, reaching highs of over $1,200 for a few weeks.

Conclusion

Sky Protocol and Ethereum face various challenges in the current market environment. While Sky Protocol expands its synthetic stablecoin offering and generates stable revenue, Ethena is responding to deteriorating market conditions by reducing its token offering. These developments demonstrate the dynamism of the DeFi sector and the protocols’ adaptability to changing market conditions.