Methodology
How risk tiers work
Tiers A, B and C come from fixed rules applied to public, sourced facts, never typed in by hand. Tier A: meets every criterion. Tier C: a single serious warning sign is enough. Tier B: everything in between.
Stablecoins: does your money hold 1 USD
Tier A: meets all
- Reserves attested monthly by an independent firm, or collateral public on the blockchain
- Reserves are cash, bank deposits and short-term Treasury bills
- The issuer holds a licence from a major regulator (an anti-money-laundering registration does not count)
- Operating for 3 years or more
- Not below 0.97 USD for more than a day in the last 3 years
Tier C: any one
- An ongoing issue (redemptions halted, enforcement against the issuer…)
- No reserve attestation published
- Currently below 0.97 USD and not recovered
- Launched less than 1 year ago
Other coins (BTC, ETH…): asset quality, not price
Tier A: meets all
- Network live for 5 years or more
- Market cap in the top 10
- No organisation controls the supply or can freeze funds
- No network halt in the last 2 years
Tier C: any one
- Live legal action against the coin itself, or the network is halted
Centralized exchanges (CEX): counterparty risk
Tier A: meets all
- Publishes a monthly proof of reserves (Merkle)
- Holds at least one licence from a major regulator (an anti-money-laundering registration does not count)
- Operating for 5 years or more
- Publicly discloses a user protection fund
- Has never left users with uncompensated losses
Tier C: any one
- An ongoing issue threatening depositors’ money (sanctions, withdrawal freeze, enforcement…)
- No proof of reserves published
- Users suffered uncompensated losses in the last 3 years
DeFi protocols: smart-contract risk
Tier A: meets all
- Live for 3 years or more
- Audited by at least 2 firms
- Runs a bug bounty programme
- TVL of $1.0B or more
- No uncompensated losses in the last 5 years
Tier C: any one
- An ongoing issue (markets paused, unresolved bad debt…)
- Live for under 1 year, or no public audit
- TVL below $100M
- Uncompensated losses in the last 2 years
- An incident that only hit an isolated market (for example a market set up by a third party on Morpho) is listed but not counted against the core product.
- Regional notes (no licence in one country, leaving a market, an investigation without a finding) and the asset’s own risk (synthetic stablecoin, unsecured lending…) are always shown but never change the tier.
- TVL and the incident list of DeFi protocols update automatically every day from DefiLlama. A new incident is marked “awaiting review” and keeps the protocol at tier B at best until an admin confirms it.
- Exchange profiles are reviewed by hand periodically and after major events. The review date is shown on each profile.
- Stablecoins: a depeg of unknown duration counts as longer than a day (conservatively). Only licences granted by major regulators (EU MiCA, New York NYDFS, US federal OCC, Singapore MAS, Hong Kong HKMA…) count; in-principle approvals, registrations and other state licences do not. Being slightly off the peg (above 0.97 USD) only caps the coin at tier B.
- A coin’s tier does not include price risk. Interest on BTC, ETH… is paid in the coin itself, so its USD value can drop sharply even while the interest keeps coming. The ability of USDT and USDC to freeze wallets is disclosed but not penalised, since regulators require it.
- Third-party ratings are shown for reference but not scored: S&P Global’s Stablecoin Stability Assessment (1 very strong to 5 weak) and the CoinDesk Data Exchange Benchmark grade for exchanges (AA to F). Each line gives the edition and the source.
- No tier is “safe”. Assets deposited on an exchange or in DeFi can be lost. A risk tier only reflects public information at the time of review.