I ran into this issue at a client where we were forced to use an iSCSI connection for their backup. After upgrading to ESXI v6, the connection started showing as Normal / Degraded.

After doing a number of troubleshooting items, I found an obscure forum post where it was claimed that ESXI will flag it as degraded if there is only one connection (ie. the connection is not redundent).

I ended up un-bonding my NAS’s two NICs, added the “new” second NIC as a target for ESXI, rescanned the storage devices on ESXI, and voila… my degradation was resolved!