Galaxy adds $100 million in Sky's sUSDS to treasury, buys SKY token as firms deepen lending ties

Galaxy Digital (GLXY) has added $100 million of Sky Protocol's sUSDS to its corporate treasury and approved the yield-generating stablecoin as collateral across its institutional trading business, the companies announced Tuesday.

Galaxy funded the sUSDS purchase from its own balance sheet, Head of Lending Max Bareiss told The Block, adding that the company held nearly $2.5 billion in cash and stablecoins as of June 30. Galaxy said it is one of the first public companies to hold sUSDS. 

Galaxy has also acquired an undisclosed amount of SKY (SKY) tokens as part of the relationship, according to Sky Frontier Foundation Global Head of Capital Markets Greg Feibus. "Holding SKY is emblematic of the breadth of the integration across treasury and lending," Feibus told The Block. "Galaxy views Sky's ability to generate meaningful protocol revenue across market environments, alongside the growing institutional use of its broader ecosystem, as central to the investment thesis."

Clients can now post sUSDS against loans through Galaxy while continuing to earn the Sky Savings Rate, the variable interest rate that sUSDS accrues, on the full position for the duration of the loan. Galaxy said its institutional platform serves more than 1,600 trading counterparties. Its institutional trading business carries an average loan book of $1.4 billion.

Feibus told The Block that institutional interest in Sky's ecosystem has picked up since S&P Global assigned Sky Protocol a 'B-' credit rating last year.

"In traditional markets, pledging Treasurys or other assets as collateral for financing is extremely common," Feibus said. "As traditional financial firms move onchain, using a yield-bearing dollar asset like sUSDS as collateral is a natural extension of that workflow."

"Institutions can also understand how Sky generates protocol surplus revenue and independently verify the protocol’s collateral and balance sheet onchain, which is a must from an underwriting perspective," Feibus added.

Sky said sUSDS supply reached $5.52 billion at the end of the second quarter, up 149% from a year earlier.

Expanding onchain financing

The two firms already have several lending arrangements in place. Grove, a Prime Agent in the Sky ecosystem, provides Galaxy with a $500 million warehouse facility for institutional loans secured by digital assets. Grove previously anchored Galaxy's $75 million tokenized CLO on Avalanche with a $50 million allocation in January.

Galaxy has also borrowed through Spark, a Sky capital allocator, to support its Galaxy Onchain Financing Rate (GOFR). Launched in July, GOFR taps onchain lending protocols Aave, Morpho, Spark, Kamino, and others to offer a blended borrowing rate.

Galaxy has now structured a new tri-party borrowing arrangement with Sky, which diversifies its funding sources and ties that financing more directly to GOFR, Feibus said. The two firms said they are also discussing expanding the existing $500 million warehouse facility, though no potential new size was disclosed.