Search…
⌃K
Links

Ethereum Assets

Risk Analysis per Asset

Last update: 15/12/2022

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.

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.

DAI

DAI Smart Contract risk: B+
All accepted collateral assets can be leveraged to generate DAI in the Maker Protocol through smart contracts called Maker Vaults. The smart contracts are known as Collateralized Debt Positions (CDPs) and the vaults are inherently non-custodial. DAI has generated more than 15,6M transactions on Ethereum.

Counterparty risk: B+

Users interact with Vaults and the Maker Protocol directly, and each user has complete and independent control over their deposited collateral as long the value of that collateral doesn’t fall below the required minimum level (the Liquidation Ratio, discussed in detail below). There are currently 482k holders on Ethereum.

DAI Market Risk: B+

DAI on Ethereum has a $6,5B market cap. Furthermore the price is correlated to the USD and over-collateralized at 140%. For this reason, we consider the risks of DAI mitigated by his over-collateralized assets such as USDC, ETH, BTC, etc. which have the highest market capitalizations and trading volumes of the MRC-20 tokens. The liquidity available on Ethereum is nearly $2,2B with approximately $90M of volume per day on Ethereum.
Collateralization of the DAI and its different collaterals: https://daistats.com/

FRAX

Frax launched on Ethereum on 21 December 2020. The code has 3 audits from Trail of Bits and Certik, and there are also 2 audits ongoing for 2022. FRAX can be minted and redeemed from the system for $1 of value, allowing arbitragers to balance the demand and supply of FRAX in the open market. At all times in order to mint new FRAX a user must place $1 worth of value into the system. FRAX has generated more than 481k transactions.

Counterparty risk: B-

The Frax DAO operates as a decentralized organization. Frax is open-source, permissionless, and entirely on-chain – currently implemented on Ethereum and 12 other chains. There is no mint function in the Token smart contract, so the team can’t mint token. There are currently 6904 holders on Ethereum.

FRAX Market Risk: B-

FRAX is currently ranked 5th in the list of stablecoins with a capitalization of $1,5B. Furthermore the price is correlated to the USD and over-collateralized at 148% by the Frax factionnal algorithmic mechanism. For this reason we consider the risks of FRAX mitigate by their principal collateralized assets such as USDC and FXS. The liquidity available on Ethereum is nearly $410,4M with approximately $5M of volume per day on Ethereum.
Collateralization of FRAX & FXS : Credmark Terminal - Actionable DeFi Data

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.

CRV

CRV Smart Contract risk: A-
CRV token was introduced to Curve in August 2020 through liquidity mining and is deployed on Ethereum since May 2021. The code has 3 audits from Trail of Bits, Quantstamp and MixBytes. Curve is the creator of the veMODEL, many protocols were inspired because this model has generated billions of transactions with more than $200B of cumulative volume and $80M of total fees earned. CRV has generated more than 3,7M transactions on Ethereum.

Counterparty risk: B+

The Curve DAO operates as a fully decentralized organization. There is no mint function in the Token smart contract, so the team can’t mint token and the maximum supply can’t be changed. The ecosystem is funded by fees of the Curve Exchange generated by the $250M+ of daily volume across all chains where Curve is deployed. There are currently 79k holders on Ethereum.

CRV Market Risk: C+

Curve is one of the leading DeFi projects. The token is available on top exchanges with nearly $2B market cap with a daily volume of 4M$ on Ethereum although a large share of CRV’s supply is locked. The liquidity available on Ethereum is nearly $94,3M.

BAL

BAL Smart Contract risk: A-
The code has 3 audits from Certora, OpenZeppelin and Trail of Bits. Balancer has generated billions of transactions with more than $47B of cumulative volume through a $3,4B total value locked and $72,3M total fees earned. BAL has generated more than 1M transactions on Ethereum.

Counterparty risk: B+

Balancer is permissionless and the ecosystem is funded by fees of the Balancer Exchange generated by the $70M+ of daily volume across all chains where Balancer is deployed. There is no mint function in the Token smart contract, so, the team can’t mint token and the maximum supply can’t be changed. There are currently 42k holders on Ethereum.

BAL Market Risk: C

The token is available on top exchanges with nearly $371M market cap with a daily volume of 2M$ on Ethereum although a large share of BAL’s supply is locked. The liquidity available on Ethereum is nearly $153M.

AAVE

The code has 5 audits from ABDK, OpenZeppelin, Peckshield, Auditor, Sigma Prime and Trail of Bits. Aave has $13B in total value locked between several chains. AAVE has generated more than 1,7M transactions since its launch on Ethereum.

Counterparty risk: A-

Aave Protocol launched on Ethereum in January 2020 and is now among the top money markets for depositors and borrowers on several chains. There is no mint function in the Token smart contract, so, the team can’t mint token and the maximum supply can’t be changed. There are currently 124k holders on Ethereum.

AAVE Market Risk: B-

The token is available on top exchanges with nearly $1,4B market cap with a daily volume of $1M on Ethereum although a large share of AAVE’s supply is locked. The liquidity available on Ethereum is nearly $115M ($110M from the 80/20 AAVE-ETH BPT).
The code has 3 audits from Nick Johnson, Quantstamp and SigmaPrime. Chainlink has $39,9B total value secured. LINK has generated more than 11,9M transactions since its launch on Ethereum.

Counterparty risk: A-

Chainlink launched on Ethereum in September 2017 on Ethereum and is now the oracle leader of the market. There is no mint function in the Token smart contract, it means that the team cannot mint tokens and the maximum supply can’t be changed. There are currently 696k holders on Ethereum.
The token is available on top exchanges with nearly $6,7B market cap with a daily volume of $4M on Ethereum although a large share of LINK’s supply is staked. The liquidity available on Ethereum is nearly $31,5M.

SUSHI & xSUSHI

The code has 2 audits from Quantstamp and Peckshield. Sushiswap has $404M total value locked on various chains and has more than $200B of cumulative volume and Liquidity Provider earned nearly $565M of fees. SUSHI has generated more than 3,2M transactions since its launch on Ethereum.

Counterparty risk: A-

Sushiswap launched on Ethereum in September 2020 and is now among the top DEX in the market. Sushi is a permissionless blockchain protocol where token holders vote on incentives and upgrades. Anyone can create new Sushi markets. There is no mint function in the Token smart contract, it means that the team cannot mint tokens and the maximum supply can’t be changed. There are currently 100k holders on Ethereum.

SUSHI Market Risk: D

The token is available on top exchanges with nearly $228M market cap with a daily volume of $1,5M on Ethereum although a large share of SUSHI’s supply is staked. The liquidity available on Ethereum is nearly $17M.