Galaxy Makes $100 Million Stablecoin Move, Opens a New Door for Clients

Galaxy Digital purchased $100 million worth of Sky Protocol’s yield-bearing sUSDS asset. The company also accepted the asset as collateral for institutional loans, allowing clients to continue earning yield on their collateral while borrowing.

According to company statements reported by The Block, Galaxy funded the purchase from its own balance sheet. As part of the partnership, an undisclosed amount of SKY tokens was also purchased. This extended the relationship beyond adding stablecoins to the company’s treasury to include institutional lending services.

Loan collateral will continue earning yield

Galaxy’s institutional clients can offer sUSDS as collateral for loans. Throughout the loan term, the entire position they pledge as collateral continues to accrue yield at the Sky Savings Rate. This rate is variable; the statement does not include a fixed-yield guarantee.

Galaxy’s institutional platform serves more than 1,600 trading counterparties. The average loan portfolio of the relevant business line stands at $1.4 billion. This figure refers to the business line’s overall loan portfolio, not the volume of new sUSDS-backed loans.

Existing financing line could also grow

Galaxy and Sky established a new three-party borrowing arrangement that diversifies the company’s financing sources. The arrangement more directly ties financing to the Galaxy Onchain Financing Rate (GOFR), which Galaxy developed using its onchain lending protocols.

Grove in the Sky ecosystem already provides Galaxy with $500 million in financing capacity for digital asset-backed institutional loans. The parties are also discussing expanding this facility, but no new amount has been announced.

According to data shared by Sky, sUSDS supply reached $5.52 billion at the end of the second quarter, up 149% from a year earlier.