Polygon Assets

Risk Analysis per Asset

Last update: 13/05/2024

Stablecoins & equivalent

USDC

Circle brings USDC natively to new blockchain networks to empower developers to build on a stable foundation they can trust. Native USDC is officially issued by Circle and is always redeemable 1:1 for US dollars.

In the case of Polygon PoS, there also exists a “bridged” form of USDC known as USDC.e, which is a USDC that has been bridged from Ethereum. Bridged USDC (USDC.e) is not directly issued by Circle.

Since November 10th, Circle has discontinued the support of deposits and withdrawals for bridged USDC.e for their services to promote the native USDC deployed on Polygon PoS.

Smart contract risk: A On November 10th, Circle announced they will discontinue the support of deposits and withdrawals for bridged USDC.e for their services, This could result in a declining supply over time of USDC.e in profit to native USDC. USDC has generated more than 15M transactions.
Counterparty risk: A- As it’s backed by real US dollars, USDC is centralized. The technology to mint new USDC and hold the backed USD is based on a legal framework. It is currently maintained by the CENTRE consortium which is a trusted entity in the ecosystem. Furthermore, USDC is the first regulated cryptocurrency bringing a lot of legitimacy to the space. Still, the infrastructure is based on public blockchains where regulators have little power. There are currently 361k USDC holders on Polygon PoS.
Market Risk: B+ USDC on Polygon PoS has a $180M market cap, one of the highest market cap and trading volume of mrc-20 tokens on Polygon PoS. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigated by USD.

USDC.e

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 Smart contract Risk: A

USDC is the native currency of Ethereum blockchain. USDC on Polygon is the bridged version of USDC on Ethereum. The bridge used is the official Polygon bridge. USDC has generated more than 131Mtransactions.

USDC Counterparty Risk: A

The process to bridge USDC use the official polygon bridge who is controlled by a ⅖ multisig. The multisig doesn't have the possibility to deposit/withdraw funds from contracts. There are currently 773K USDC holders on Polygon.

USDC Market Risk: B+

USDC on Polygon has a $1.4B market cap, one of the highest market cap and trading volume of mrc-20 tokens. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigate by USD.

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 34M transactions on Polygon.

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 685k holders on Polygon.

DAI Market Risk: B+

DAI 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 asset such as USDC, ETH, BTC, etc. which have the highest market capitalizations and trading volumes of the MRC-20 tokens. The liquidity available on Polygon is nearly $12,4M with approximately $3M of volume per day on Polygon.

wUSK

Smart Contract risk: B

The Kuma Protocol launched in March 2023 and code has audits from Hacken and Code4Arena and has Financial audits by Grant Thornton.

wUSK is the wrapped version of USK and is redeemable for USK at any point. USK launched on May 11, 2023 and has currently generated more than 20 transactions.

Counterparty risk: B-

The Kuma Protocol multisig is owned by 4/7 multisig currently held by the Mimo Labs team members (this will change in the near future with a multisig shared with elected DAO members), and this multisig has access to different functions such as: Admin_role, Pause/Unpause_Swap, Set_Uri and Set_Epoch_Length.

In addition, KumaSwap uses a central bank oracle to keep the protocol competitive and avoid an excessively high KIBT rate. There is one oracle for each risk class since different risk classes have different interest rates.

Keepers monitor the KIBT and KUMASwap contracts to keep the KIBT yield up-to-date. Keepers are incentivized through the KUMAKeeper contract

Mimo Capital AG (MCAG) is the centralized entity that holds the physical bonds represented by KUMA NFTs is MCAG. MCAG mints new KUMA NFTs every time a user buys a claim to the physical bonds off-chain. Additionally, MCAG maintains the central bank oracle and a multisig with a manager role in the MCAG access controller to manage centralized aspects of the system.

See Kuma Smart Contract Architecture to learn more.

Market Risk: B-

wUSK is a rebase token, which means that the value of 1 wUSK increases continuously according to the central bank’s Oracle feed rate.

wUSK is the wrapped version of USK (ERC-4626 compliant) and is redeemable for USK at any point.

USK is a Kuma IBT (interest-bearing token) backed by ERC-721 NFTs that represent ownership of a physical bond. The NFT holder can redeem the NFT off-chain from MCAG for the market-rate bond value at any point.

wFRK

Smart Contract risk: B

The Kuma Protocol launched in March 2023 and code has audits from Hacken and Code4Arena and has Financial audits by Grant Thornton.

wFRK is the wrapped version of FRK and is redeemable for FRK at any point.

Counterparty risk: B-

Keepers monitor the KIBT and KUMASwap contracts to keep the KIBT yield up-to-date. Keepers are incentivized through the KUMAKeeper contract

See Kuma Smart Contract Architecture to learn more.

Market Risk: B-

wFRK is a rebase token, which means that the value of 1 wFRK increases continuously according to the central bank’s Oracle feed rate.

wFRK is the wrapped version of FRK (ERC-4626 compliant) and is redeemable for FRK at any point.

FRK is a Kuma IBT (interest-bearing token) backed by ERC-721 NFTs that represent ownership of a physical bond. The NFT holder can redeem the NFT off-chain from MCAG for the market-rate bond value at any point.

Other Assets

WETH

WETH is the wrapped version of ETH, the native currency of Ethereum blockchain.

WETH Smart contract Risk: A-

The WETH token on Polygon was launched in January 2021. WETH is the wrapped version of ETH, the native currency of Ethereum blockchain. WETH on Polygon is the bridged version of WETH on Ethereum. The bridge used is the official Polygon bridge. WETH has generated more than 144M transactions.

WETH Counterparty Risk: A

The process to bridge WETH use the official polygon bridge who is controlled by a ⅖ multisig. The multisig doesn't have the possibility to deposit/withdraw funds from contracts. There are currently 1.15M WETH holders on Polygon.

WETH Market Risk: B+

WETH on Polygon has a $1.1B market cap, one of the highest market cap and trading volume of mrc-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 Smart contract Risk: A

WBTC is the wrapped version of BTC, the native currency of Bitcoin blockchain. WBTC on Polygon is the bridged version of WBTC on Ethereum. The bridge used is the official Polygon bridge. WBTC has generated more than 9.1M transactions.

WBTC Counterparty Risk: A

The process to bridge WBTC use the official polygon bridge who is controlled by a ⅖ multisig. The multisig doesn't have the possibility to deposit/withdraw funds from contracts. There are currently 9.1M WBTC holders on Polygon.

WBTC MARKET Risk: B+

WBTC on Polygon has a $302M market cap, one of the highest market cap and trading volume of mrc-20 tokens. Furthermore the price is pegged to Ethereum’s as it is redeemable for it. For this reason we consider the risks of WBTC mitigate by BTC.

WMATIC

WMATIC is the wrapped version of MATIC, the native currency of Polygon blockchain.

WMATIC Smart contract Risk: A-

The WMATIC token on Polygon was launched in. WMATIC is the wrapped version of MATIC, the native currency of Polygon blockchain. WMATIC has generated more than 150.3 M transactions.

WMATIC Counterparty Risk: B+

WMATIC market Risk: B

WMATIC on Polygon has a $210M market cap, one of the highest market cap and trading volume of mrc-20 tokens. Furthermore the price is pegged to MATIC as it is redeemable for it at 1:1. For this reason we consider the risks of WMATIC mitigate by MATIC.

CRV

CRV Smart contract Risk: B

CRV token was introduced to Curve in August 2020 through liquidity mining and is deployed on Polygon 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 1,2M transactions on Polygon.

CRV 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 24k holders on Polygon.

CRV market Risk: C

Curve is one of the leading DeFi projects. The token is available on top exchanges with nearly $533M market cap with a daily volume of 250k$ on Polygon although a large share of CRV’s supply is locked. The liquidity available on Polygon is nearly $1,5M.

BAL

BAL Smart contract Risk: B

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 1,1M transactions on Polygon.

BAL Counterparty Risk: B

The 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 15k holders on Polygon.

BAL market Risk: C

The token is available on top exchanges with nearly $274M market cap with a daily volume of 400k$ on Polygon although a large share of BAL’s supply is locked. The liquidity available on Polygon is nearly $8M.

AAVE

AAVE Smart contract Risk: B

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 6M transactions since its launch on Polygon April 2021.

AAVE Counterparty Risk: A-

Aave Protocol launched on Ethereum in January 2020 on Ethereum 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 189k holders on Polygon.

AAVE market Risk: C

The token is available on top exchanges with nearly $1,5B market cap with a daily volume of 650k$ on Polygon although a large share of AAVE’s supply is locked. The liquidity available on Polygon is nearly $5,2M.

LINK

LINK Smart contract Risk: B

The code has 3 audits from Nick Johnson, Quantstamp and SigmaPrime. Chainlink has $39,9B total value secured. LINK has generated more than 3M transactions since its launch on Polygon in January 2021.

LINK Counterparty Risk: B+

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, so, the team can’t mint token and the maximum supply can’t be changed. There are currently 31k holders on Polygon.

LINK market Risk: C+

The token is available on top exchanges with nearly $4,3B market cap with a daily volume of $500K on Polygon although a large share of LINK’s supply is staked. The liquidity available on Polygon is nearly $5M.

SUSHI

SUSHI Smart contract Risk: B

The code has 2 audits from Quantstamp and Peckshield. Sushiswap has $852,3M 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 4,4M transactions since its launch on Polygon in March 2021.

SUSHI Counterparty Risk: B+

Sushiswap launched on Ethereum in September 2020 on Ethereum 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, so, the team can’t mint token and the maximum supply can’t be changed. There are currently 33,8k holders on Polygon.

SUSHI market Risk: C

The token is available on top exchanges with nearly $300M market cap with a daily volume of $30k on Polygon although a large share of SUSHI’s supply is staked. The liquidity available on Polygon is nearly $150k.

LST

stMATIC

stMATIC Smart Contract risk: C

Lido has been audited by a ChainSecurity, MixBytes, Sigma Prime, Oxorio and StateMind and stMATIC has been audited by Oxorio and Shard Labs. stMATIC is the core contract which acts as a liquid staking pool. The contract is responsible for deposits, withdrawals, minting and burning liquid tokens. stMATIC has generated more than 1,7M transactions on Polygon.

Counterparty risk: B

Lido on Polygon is a protocol that runs on the Ethereum blockchain and it is upgradable. The address that controls the ability to implement day-to-day changes and upgrade the protocol is controlled by a Gnosis Safe with a 3 of 5 multisig signer requirement. The signers have established validators and ecosystem partners who can execute privileged operations. Further details can be found here. There are currently 26,3k holders on Polygon.

stMATIC Market Risk: C-

stMATIC is an ERC20 token that represents the account’s share of the total supply of MATIC tokens inside Lido system. It is a non-rebase token, which means that the amount of tokens in the user’s wallet is not going to change. During time, the value of this token is changing, since the amount of MATIC tokens inside the protocol is not constant.

Since Lido and stMATIC are recent, the average volume isn’t that relevant for now. The liquidity available on Polygon is nearly $80M. Furthermore, stMATIC is fully redeemable for the MATIC that it contains after an unstaking period of 80 epochs (3-4 days), which means that stMATIC has indirectly the liquidity of MATIC.

MATICx

MATICx Smart Contract risk: C+

MaticX has been audited by ImmuneBytes and Halborn and there is also a $1M bug bounty.

MaticX has generated more than 300k transactions.

Counterparty risk: B-

MaticX is the core contract that acts as a receipt tokens for staked MATIC. MaticX can be acquired on Polygon and mainnet. Both means of acquiring MaticX utilize the same contract address on Polygon. MaticX is a non-rebasing token, which means that the amount of tokens in the user’s wallet is not going to change. Over time, while rewards accumulate, the value of the MaticX tokens increases relative to MATIC. There are currently 3k holders on Polygon.

MATICx Market Risk: B-

MaticX is the representation of MATIC staked in a validator, for this reason we consider the risks of MaticX mitigated by MATIC which is the 11th biggest marketcap coin. Since Stader and MaticX are recent, the average volume isn’t that relevant for now. The liquidity available on Polygon is nearly $28M. Furthermore, MaticX is fully redeemable for the MATIC that it contains after an unstaking period of 90 epochs (3-4 days), which means that MaticX has indirectly the liquidity of MATIC.

wstETH

Smart Contract risk: C+

wstETH was deployed 5th August 2022 and is bridgeable since that day on Polygon. Lido Protocol code has multiple audits. The contract is responsible for Ether deposits and withdrawals, minting and burning liquid tokens, delegating funds to node operators, applying fees, and accepting updates from the oracle contract on the Ethereum chain while wstETH is the wrapped version of stETH that we used on the Polygon chain. wstETH has generated more than 42k transactions on Polygon.

Counterparty risk: C+

Lido relies on a set of oracles to report staking rewards to the smart contracts. Lido on Ethereum is a protocol that runs on the Ethereum blockchain and it is upgradable. The Lido DAO controls the ability to implement day-to-day changes and upgrade the protocol with a successful DAO vote. The Lido DAO is an Aragon organization and the roles and addresses can be checked in the Aragon UI. To mitigate withdrawal risks, Lido staking went live on December 18th through a withdrawal key ceremony performed by a group of the industry’s most trusted builders. Lido has recently been upgraded to v2 and has implemented stETH withdrawal on their webapp, it means that it’s now possible to redeem ETH from stETH on Ethereum without using liquidity pool (but the processus has a waiting time of 1-2 days).

The process to bridge wstETH use the official polygon bridge who is controlled by a 2/5 multisig. The multisig doesn’t have the possibility to deposit/withdraw funds from contracts. wstETH has 7.5k holders on Polygon

Market Risk: B

stETH is currently ranked 1st in the list of Ethereum and Polygon Liquid Staking assets with a capitalization of $8,5B. Furthermore, wstETH is the wrapped version of stETH and is redeemable at any time on the Ethereum chain, the price is correlated to the ETH since stETH is the representation of ETH staked through Lido. Since the Shanghai hard fork, it’s now possible to redeem ether by burning stETH at the same 1:1 ratio (cf withdrawals feature design). For these reasons, we consider the risks of stETH mitigated by his principal collateralized assets: ETH. The wstETH liquidity available is nearly $5M with approximately $150k of volume per day on Polygon.

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Last updated 7 months ago