DeFi savings protocol Sky posted a first-quarter loss of $5 million after interest payments to token holders more than doubled, according to a report created by Sky contributors from Steakhouse Financial.

The loss is a stark turnaround from the previous quarter, when Sky, formerly known as MakerDAO, registered a $31 million profit. The reason for the 102% increase in interest payments is the decision to incentivize use of the protocol’s newer Sky dollar stablecoin (USDS) over the existing DAI.

«The Sky Savings Rate was kept very high at 12.5% relative to the rest of the market, driving massive inflows» Rune Christensen, co-founder of Sky, told CoinDesk over Telegram. When Sky began lowering interest rates to 4.5% in February, a lot of investors stuck around, he said.

The situation is a double-edged sword for the protocol, which was among the first cohort of decentralized finance apps to spring up on Ethereum in 2017.

Sky operates similar to a traditional bank. It needs to lend to others at a rate higher than it pays its savers.

However, offering higher rates on USDS without a corresponding increase in demand for the stablecoin is hurting the protocol’s profitability, PaperImperium, governance liaison at blockchain research and development company GFX Labs, told CoinDesk over Telegram.

«USDS is a major drag on earnings,» he said. «DAI makes money. USDS, not so much.»

The push toward USDS is part of Sky’s so-called Endgame plan, an initiative led by Christensen aimed at transforming the protocol into a more decentralized and resilient system.

No new demand?

When Sky rebranded from MakerDAO and launched USDS in August as part of Endgame, the plan was that the new stablecoin would appeal to a different set of users than DAI.

USDS was designed to better comply with regulations and financial reporting requirements. It was targeted toward sophisticated investors like hedge funds, family offices and other institutions looking to dip their toes into decentralized finance.

But it’s unclear if USDS has been able to attract a substantial number of new users.

The returns investors can earn on USDS comapred to DAI is different: USDS pays out 4.5%, while DAI yields 2.75%.

Many investors swapped their DAI for USDS, meaning Sky had pay out more to people who previously were happy to earn a lower yield or, in many cases, no yield at all, PaperImperium said.

To be sure, the report said the combined supply of USDS and DAI has increased 57% since the start of the quarter. But a large part of this increase is from Ethena, the synthetic dollar protocol. It has piled over $450 million into staked USDS, and passes the yield on to those who stake its own stablecoin, USDe.

Over the past week, Ethena has switched some of its reserves from USDS to USDtb — a stablecoin backed by BlackRock’s USD Institutional Digital Liquidity Fund, or BUIDL.

The move means there’s less USDS in circulation. But it may also benefit Sky by reducing the amount of interest the protocol must pay out.

Read more: MakerDAO’s Christensen Hopes for ‘Firm Decision’ as MKR Holders Vote on Sky Brand

EToro could set pricing on its initial public offering (IPO) at a much higher level than the marketed range, people familiar with the matter told Bloomberg.

The company planned to offer 10 million shares for $46 to $50 each, based on a previous filing, but received significantly more demand than shares available, according to the story.

The IPO is set to price after the U.S. market-close on Tuesday.

As with some others, the Israel-based company had paused its plans to list on the Nasdaq exchange in April amid shaky markets resulting from U.S. President Donald Trump’s trade policies. Last week, however, Bloomberg reported that it was proceeding with its IPO, becoming the first firm to resume going public plans. Among others delaying IPOs were stablecoin issuer Circle, payments app Klarna and ticket platform StubHub.

EToro is looking to receive a valuation of $4.5 billion which is below the $10.4 billion valuation it sought in 2021 when it first attempted to go public. It would trade under the ticket “ETOR”.

The Gibraltar government said it plans to establish the world’s first rules for the clearing and settlement of crypto derivatives, creating a regulatory framework to improve market integrity and reduce key risks.

Working with the Gibraltar Financial Services Commission (GFSC) and crypto exchange Bullish (whose owner, Bullish Group, is also the parent of CoinDesk), the government has built a framework over the past six months that tailors traditional financial clearing regulations to the virtual asset market.

The framework will enable virtual asset derivative contracts to be cleared and settled by a recognized clearing house, Bullish said on Tuesday.

Clearing houses ensure that trades are finalized, with buyers and sellers meeting their commitments. Many virtual asset exchanges have been performing that function which, in the absence of regulatory oversight, can lead to failures in the process, Bullish said.

The proposed regime will allow the establishment of separate clearing houses with «improved transparency and capitalization,» it said.

Read More: UK’s First FCA-Regulated Crypto Derivatives Trading Venue GFO-X Debuts in London

CORRECT (May 13, 15:34 UTC): Corrects that CoinDesk’s parent company is Bullish Group, not the crypto exchange Bullish.