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Ratings and Risk Metrics Drive Informed Decisions

Below are example use cases of how Ratings are used by different market participants:

Lending Markets​

Lending markets can leverage Credora’s DeFi Risk Ratings to assess the underlying risk so their users can make better informed decisions with their capital. By integrating these risk ratings, lending platforms can offer more secure, risk-adjusted loan terms, reduce the cognitive decision making, and mitigate the potential for liquidations.

Value Propositions:

  • Increased TVL: Boost protocol credibility and TVL through verified, real-time risk ratings.
  • Informed Decision-Making: Assess asset, yield generation, and protocol risk before lending or borrowing capital.
  • Risk Mitigation: Reduce the risk of defaults and liquidations with real-time risk ratings.
  • Enhanced Capital Efficiency: Optimize lending strategies by considering risk-adjusted returns.
  • Increased Stability: Build trust with lenders and borrowers by incorporating transparent risk metrics.
  • Risk Parameter Advisory: Credora can advise on structuring your lending market parameters.

Vault Curators​

Vault curators, who manage DeFi vaults that aggregate various assets or strategies, can use Credora’s risk ratings to optimize their vault's performance by selecting strategies with better risk-adjusted returns. These ratings offer critical insight into the underlying risks of each asset, helping vault curators create optimized returns with the highest yield and lowest risk. By providing an independent assessment of risk that brings transparency and confidence to users, vault curators can attract more capital and TVL.

Value Propositions:

  • Increased Vault TVL: Research from Credora has seen that on Morpho, rated vaults have stickier TVL as the risk is transparent and credible ratings build user confidence translating into larger capital allocation. More TVL is more revenue/fees generated by vault curators.
  • Better Risk-Reward Balance: Select assets with optimal risk-adjusted returns for vault strategies.
  • Dynamic Strategy Adjustment: Use real-time data to adapt vault strategies and asset allocations as market conditions change.
  • Comprehensive Risk Insights: Access detailed risk ratings of various protocols and assets.

Yield Aggregators​

Yield aggregators can utilize Credora’s risk ratings to better understand and assess the risk levels of different DeFi protocols or strategies they aggregate. By incorporating risk ratings into their platform, yield aggregators can provide users with more transparency around risk-adjusted yields and avoid exposure to high-risk protocols. This added layer of risk intelligence enables yield aggregators to differentiate themselves by offering more secure and informed investment options to their users.

Value Propositions:

  • Transparency in Yield Assessment: Offer users a clearer picture of risk-adjusted yields.
  • Dynamic Risk Management: Avoid high-risk protocols by assessing their risk profiles before integration. Can create dynamically adjusted yield aggregation strategies based off ratings as they change with market conditions.
  • Differentiation in the Market: Provide a competitive edge with informed, risk-conscious yield offerings.
  • Enhanced User Trust: Build credibility by offering secure and transparent investment options.

Asset Issuers​

Asset issuers looking to launch tokens or other financial instruments in the DeFi space can benefit from Credora’s Risk Ratings to assess the stability and risk of their own or partnered DeFi strategies. By aligning their products with risk ratings, asset issuers can attract investors who seek transparency and security, reducing the uncertainty around potential losses. These insights also allow issuers to tweak their tokenomics and protocols to better align with risk appetite, improving market confidence.

Value Propositions:

  • Market Confidence: Improve trust by aligning products with clear, transparent risk ratings.
  • Attract Investors: Appeal to risk-conscious investors seeking safer DeFi options.
  • Optimized Tokenomics: Adjust token structure and protocol strategies based on risk insights.
  • Reduced Investor Uncertainty: Provide investors with clearer expectations around potential risks.

Centralized Exchanges (CEX) & Wallets​

CEXs and Wallets can integrate RedStone's Credora Risk Ratings into their trading platforms to enhance the transparency of the DeFi tokens they list. These ratings help assess and rank the risk profiles of listed DeFi assets, allowing traders to make more informed decisions and reducing the likelihood of market manipulation or unexpected volatility. By providing real-time risk insights, platforms can improve user trust and create a safer trading environment for DeFi assets.

Value Propositions:

  • Asset Transparency: Rank DeFi assets by risk profile, helping traders make informed decisions.
  • Reduced Volatility: Minimize unexpected price swings by vetting high-risk tokens before listing.
  • Enhanced User Trust: Build credibility by providing real-time risk ratings for DeFi assets.
  • Improved Trading Environment: Ensure safer and more reliable trading experiences for users.