Maker’s rebrand to Sky is off to a hot start.

Five days after releasing its new stablecoin, Sky’s new USDS token — a successor to Maker’s $5.3 billion stablecoin DAI — is already worth $490 million, according to Sky Money data.

Now, Rune Christensen, the Norwegian co-founder of Sky, formerly called Maker, is pitching the product as a better alternative to Tether’s $119 billion stablecoin USDT.

“USDS is going to be much better positioned to tap into people who know how to use Tether but aren’t getting rewarded on their assets,” he told DL News in an exclusive interview at the TOKEN2049 conference in Singapore.

The $173 billion stablecoin market is getting more competitive than ever. It’s not just crypto firms vying for a slice of the pie either.

In August 2023, PayPal launched its PYUSD stablecoin. A year later, it’s worth more than $724 million. A recent report from CoinDesk indicates that the UK-based fintech Revolut is also mulling the launch of a stablecoin.

The crowded market makes sense. These products are a major boon for issuers.

That’s because stablecoin firms hold US government bonds and cash worth the same amount as the stablecoin in circulation. In a high interest-rate environment, where US Treasury debt earns as much as 5% depending on their duration, these firms are recording serious revenue.

In the first half of 2024, Tether revealed that it had raked in more than $5.4 billion in excess returns from its portfolio of largely US Treasuries.

Sky is cashing in, too.

In July, the decentralised autonomous organisation that manages the crypto project announced it planned to invest $1 billion in US Treasuries.

It’s also turning to some more crypto-native rewards schemes to separate itself from the pack.

Sky’s the limit

Holders of its USDS token can earn 6.25%. The yield comes from Sky Protocol’s revenues, like those from its Treasury holdings. It’s an offer that Tether doesn’t give its holders.

Christensen also hopes additional token rewards in the protocol’s new governance token SKY, will help boost USDS adoption.

A new partnership programme with lending behemoth Aave, historically a contentious relationship, will offer more rewards for those who borrow and deposit USDS on Aave.

Christensen said the programme will combine all the rewards possible from both protocols.

“Take USDS to the mass market, make it simple to use, and then position it as this unique way to get a savings rate on your USDS, but also these interesting Sky token rewards,” said Christensen.

So far, the pitch is working.

Liam Kelly is a DeFi Correspondent and Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email them at liam@dlnews.com and bweiss@dlnews.com.