Asset Rating

DeFi “Lego”(composability) enables the Patronus Protocol to connect with other protocols or platforms in the DeFi ecosystem. Therefore, the Patronus platform is inevitably exposed to the risk of financial contagion, and may be severely affected by the failure of the pledged asset system and market fluctuations.

In order to maintain a reasonable level of security, Patronus evaluates assets from three dimensions, and divides the risk level into five levels from low to high, that is E (very high risk), D (high risk), C (medium risk), B (low risk) and A (very low risk). An asset with a risk rating of E will not be connected to the protocol.

Smart Contract Risk: This measures the technical security of the underlying code of the asset. Whether it has passed the code audit of a professional security company is an important criterion for measuring risk. In addition, the safe running time and transaction volume of contracts are also important indexes for evaluating security.

Market Risk: This measures the ability of an asset to resist market fluctuations. Liquidity, volatility and market value are all important indicators. If the value of pledged assets declines, they may trigger liquidation, and the market needs to have sufficient liquidity to support timely liquidation.

Counterparty Risk: This measures the degree of decentralization of the asset itself, including the number of holder addresses, governance system, and the degree of trust in the asset itself.

Asset	Rating	Performance	Decentralization	Market Cap	Liquidity	Volitility
lzUSDC	A	A	A	A	A	A
lzUSDT	B	A	C	A	A	A
lzWETH	B	A	B	A	A	C
APT	C	B	C	B	B	C
CAKE	C	B	C	B	C	C