Sky Frontier Foundation (“SFF”), an independent organization that supports research, education, and ecosystem development for Sky Ecosystem, published its Sky Ecosystem Q1 2026 Quarterly Report, reflecting the strongest quarter in Sky Protocol history across every key financial and operational metric.
Q1 2026 marks a decisive inflection point for Sky Protocol. The protocol returned to record-setting growth, generating Gross Protocol Revenue of $123.79 million for the three months ended March 31, 2026. This is an increase of 28.9% year-over-year and 56.8% quarter-over-quarter, surpassing every prior quarterly result in protocol history. Gross Protocol Revenue recovery was matched by a similar improvement in protocol surplus: Net Protocol Surplus for the period was $46.04 million, compared to a net loss of $13.51 million for the three months ended March 31, 2025, with the Net Protocol Revenue margin expanding to 49.06% from 30.24% in Q4 2025. In a single quarter, the protocol generated 92.4% of its total reported protocol surplus for full-year 2025 and, on a trailing twelve-month basis, Sky Protocol has now accumulated $109.40 million in cumulative net protocol surplus.
Rune Christensen, Director, Sky Frontier Foundation and Co-Founder of Sky Protocol, said, “Q1 2026 validated the thesis we outlined at the beginning of the year and exceeded it across every key measure. Sky Protocol is demonstrating the kind of financial performance and capital discipline that institutions require. The combination of diversified, real-world asset backing, a decade-long track record without a smart contract exploit, an S&P credit rating, and a governance-driven move to build a $150 million solvency reserve positions Sky Protocol as the most credible destination for institutional-scale stablecoin adoption in the market today.”
The primary driver of both revenue and supply growth is the Sky Savings Rate (“SSR”), the protocol’s flagship savings engine. sUSDS, the rate-bearing savings instrument denominated in USDS, surpassed $5 billion in February 2026 and ended the quarter at $6.49 billion, an increase of 71.7% from $3.78 billion as of December 31, 2025. The SSR stood at 3.75% per annum at March 31, 2026, providing holders with a transparent, auditable, and diversified rate relative to alternative onchain stablecoin products. Total USDS supply reached $11.70 billion at quarter end, an increase of 67.9% year-over-year. sUSDS is currently the largest rate-bearing stablecoin by outstanding supply globally.
On March 14, 2026, Sky Governance approved a capital restructuring designed to prioritize protocol resilience and long-term capital retention over near-term distributions. Rather than continuing to distribute surplus externally, the protocol is redirecting the majority of earnings toward building a $150 million Solvency Reserve, a governance-driven decision to strengthen Sky’s financial foundation ahead of institutional-scale growth. Token buyback allocations were reduced from 75% to 7.5% of protocol surplus on an interim basis, with allocations to be restored to 25% each once the Solvency Reserve reaches $125 million. Sky Reserves currently stand at $50.90 million, with the Foundation estimating reserves may approach $75 million by June 30, 2026. The Foundation’s full-year 2026 forecasts of $611.5 million in Gross Protocol Revenue and $157.8 million in net protocol surplus remain unchanged.
John Conneely, Head of Business Development, Sky Ecosystem, said, “The institutional appetite for transparent, rate-bearing stablecoin infrastructure is larger than most of the market appreciates. What we are seeing in conversations with institutions is not exploratory interest. It is active deployment decision-making. Sky’s combination of a decade-long track record, diversified real-world asset collateral, and the governance discipline to build a $150 million solvency reserve is precisely what moves a protocol from an evaluation to adoption. We entered 2026 with ambitious targets, and Q1 has given us every reason to believe we will exceed them.”
SFF’s 2026 Outlook Summary forecasts — published in February and projecting $611.5M in Gross Protocol Revenue and $157.8M in protocol surplus — remain unchanged following Q1 outperformance across every metric. The ecosystem’s 10-Agent estimate by year-end also remains on track. SFF further notes that Sky Core Council has initiated exploration of fixed-term, fixed-rate USDS-denominated stablecoin products, with an initial $5M subsidy pool to bootstrap early adoption.
Sky Frontier Foundation will host a Sky Ecosystem Q1 Insights Call to discuss financial and operating results, followed by a question-and-answer period.
The full Q1 2026 Quarterly Report, including complete P&L tables, balance sheet, and financial dashboard links, is available at insights.skyeco.com.
About USDS
Created through Sky Protocol, USDS is the third-largest stablecoin
About Sky Frontier Foundation
Sky Frontier Foundation is an independent organization that supports research, education, and ecosystem development for Sky Ecosystem.