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Ethereum Assets

Risk Analysis per Asset

Last update: 25/03/2022

Stablecoins

USDC

USDC is primarily promoted by Coinbase and supported by the CENTRE consortium. Together with DAI, it has been the most used stablecoin in the DeFi ecosystem following a strong push from Coinbase who provides liquidity to projects.
USDC is the native currency of Ethereum blockchain. USDC on Polygon is the bridged version of USDC on Ethereum. USDC has only been active since September 2018. USDC has generated more than 38.1M transactions.
USDC Counterparty Risk: A
As it’s backed by real US dollars as well as other high quality reserve assets (since recently, USDC is centralised. The technology to mint new USDC and hold the backing USD value is based on a legal framework. It is currently maintained by the CENTRE consortium which is a trusted entity in the ecosystem and audited monthly by Grant Thornton. Furthermore, USDC is the first regulated cryptocurrency bringing a lot of legitimacy to the space. Still, the infrastructure is based on the Ethereum blockchain where regulators have little power.
USDC Market Risk: B+
USDC on Polygon has a $44.3B market cap, one of the highest market cap and trading volume of erc-20 tokens. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigate by USD.

Other Assets

WETH

Ethereum is not an ERC-20 token, leading to some missing functionality. Wrapped ETH solves these compatibility issues with an ETH backed token which has gained traction within DeFi.
The WETH token on Ethereum was launched in September 2017. WETH is the wrapped version of ETH, the native currency of Ethereum blockchain. WETH is currently the most decentralized erc-20 token in the world. WETH has generated more than 99M transactions.
WETH Counterparty Risk: A
The process to wrap ETH is permissionless. Anyone can trade ETH with the relay smart contract to get WETH. Similarly WETH can be unwrapped to get the ETH back. There are currently 506k WETH holders on Ethereum.
WETH Market Risk: B+
WETH on Ethereum has a $12B market cap, one of the highest market cap and trading volume of erc-20 tokens. Furthermore the price is pegged to Ethereum’s as it is redeemable for it. For this reason we consider the risks of WETH mitigate by ETH.

WBTC

WBTC is the wrapped version of BTC, the native currency of Bitcoin blockchain.
WBTC is the wrapped version of BTC, the native currency of Ethereum blockchain. WBTC has generated more than 3.4M transactions.
WBTC Counterparty Risk: A
WBTC is centralised with bitcoins custodially locked on the Bitcoin blockchain. The custody is performed by BitGo, a leader in blockchain custodian technologies.
WBTC market Risk: B+
WBTC on Ethereum has a $8.5B market cap, one of the highest market cap and trading volume of erc-20 tokens. Furthermore the price is pegged to Bitcoin’s as it is redeemable for it. For this reason we consider the risks of WBTC mitigate by BTC.

RAI

RAI Smart contract Risk: C+

The Reflexer protocol and its stable asset RAI are permissionless, and aims to be “governance-minimized” in the future. The way RAI are minted/burned works around a “Safe”. In order to mint RAI, you must open a Safe. RAI will be burned by the repayment of the debt. RAI has generated more than 111k transactions.
RAI Counterparty Risk: C+
The process to mint RAI is permissionless and aims to be “governance-minimized” in the future, which makes it one of the most secure and decentralized stable asset. There are currently 3013 holders on Ethereum.
RAI market Risk: C+
RAI on Ethereum has a $14,7M market cap. Furthermore the price isn’t correlated by another stable asset but the stability is provided by the Reflexer mechanism. For this reason we consider the risks of RAI mitigated by his only over-collateralized asset: ETH, which is one of the highest market cap and trading volume of ERC-20 token.

LUSD

The entire Liquity protocol and its stablecoin LUSD are permissionless, governanceless and without any multisig. The way LUSD are minted/burned works around a “Trove”. In order to mint LUSD, you must open a Trove. LUSD will be burned by the repayment of the debt, by the owner of the Trove or by redemptions (Arbitraging). LUSD has generated more than 219k transactions.
LUSD Counterparty Risk: C+
The process to mint LUSD is permissionless, governanceless and without any multisig, which makes it one of the most secure and decentralized stablecoins. There are currently 4915 holders on Ethereum.
LUSD market Risk: B
LUSD on Ethereum has a $184M market cap. Furthermore the price is correlated to the USD by the Liquity over-collateralization mechanism. For this reason we consider the risks of LUSD mitigated by his only over-collateralized asset: ETH, which is one of the highest market cap and trading volume of ERC-20 token.
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Risk Analysis per Asset
Stablecoins
USDC
Other Assets
WETH
WBTC
RAI
LUSD