This section show cases the results of the risk assessment methodology and analyses the results for each of the currencies considered.

Asset Risk Map

各资产风险评估表_Asset Risk Map

Risk Analysis per Asset

Listed Assets

DAI

DAI is the first decentralised stablecoin built on the Ethereum network. It is minted by creating a Collateralised Debt Position (CDP) and staking a certain amount of ETH. Every CDP must be overcollateralised by at least 150% of the minted DAI. Below this threshold, the CDP gets liquidated.

DAI Smart contract Risk: B+
DAI is active since December 2017 and has remained fully operational. In November 2019 the contract has evolved for DAI to hold a basket of currencies instead of just Ethereum. Given its wide use in the DeFi space, the contract already holds over 7 million transactions which mitigates the risk rising from its young age.

DAI Counterparty Risk: C+
DAI is the stablecoin of Maker DAO which has been functioning efficiently since inception. Anyone can mint DAI by opening a CDP. The Maker team also has some control over the minting.

Following the Black Thursday crash of March 2020, there was some deficit in the backing of DAI which required the minting of additional MKR. Additionally, there are some concerns related to the centralisation of the price feed, with oracles failing to keep the prices up to date during the said Black Thursday.

DAI Market Risk: A-
DAI has over $2 billion market capitalisation with around $380 million of average daily volume spread across the top exchanges. It has been robust throughout its whole life, sustaining multiple ETH price drops, its volatility is low.

DAI Market Overall Rating: B+

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 Smart contract Risk: A-
USDC has only been active since September 2018 with already over 12 million transactions.

USDC Counterparty Risk: B
As it’s backed by real US dollars, USDC is centralised. 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 the Ethereum blockchain where regulators have little power.

USDC Market Risk: A
There is a high trading volume for USDC reaching over $800 million a day, with many pairs in multiple exchanges and a high market capitalisation. The token is used in multiple DeFi platforms both as collateral and principal. USDC is a stablecoin backed by real USD leading to low volatility.

USDC Market Overall Rating: A-

USDT

Tether is the oldest USD backed stablecoin. It initially started as an independent currency built on the Omni blockchain, and progressively moved on the Ethereum blockchain, presumably to take advantage of the DeFi ecosystem.

USDT Smart contract Risk: A-
USDT is the first stablecoin in operation since November 2014 and on this Ethereum contract since November 2017. With over 90 million transactions, USDT is one of the most used coins.

USDT Counterparty Risk: C+
1) In February this year, the NYAG’s office announced the settlement, formally ending the inquiry that kicked off in April 2019. Under the terms of the settlement, Bitfinex and Tether will admit no wrongdoing but will pay $18.5 million and provide quarterly reports describing the composition of Tether’s reserves for the next two years.

2) On March 31 this year, Tether has released an assurance report delivered by accounting firm Moore Cayman that shows that its stablecoins were fully backed as of February.

The report is dated February 28 and has an assurance opinion by Moore Cayman that Tether’s consolidated assets exceeded its consolidated liabilities as of the date.

3) On May 4 this year, CoinBase, known for its compliance and safety, officially listed USDT. So far, all leading
exchanges have supported USDT.

So, the risk of users and the WePiggy protocol suffering huge losses due to this is very small.

USDT Market Risk: A+
USDT is widely available in different exchanges and is the stablecoin with the highest volume. The value of USDT is stable around 1 dollar as it is backed by USD.

USDT Market Overall Rating: A-

ETH

WePiggy is developed on the Ethereum blockchain, making it fully dependent on Ethereum’s reliability. WePiggy and all the currencies presented are part of the Ethereum ecosystem; ETH is therefore the least risky currency considered.

ETH Smart contract Risk: A+
Ethereum is among the oldest cryptocurrencies ranking number 2 in terms of market capitalization. It has a large and committed community as demonstrated by over 1 billion transactions conducted.

ETH Counterparty Risk: A+
Ethereum is the most diverse ecosystem of digital currencies with over 134 million holders. There are many organizations that are dedicated to pushing the ecosystem further and decisions are community based.

ETH Market Risk: A
Ethereum has among the highest market capitalisation and trading volumes of digital currencies. Ethereum’s price has been rather volatile recently.

ETH Market Overall Rating: A+

WBTC

Wrapped Bitcoin is an attempt to bring Bitcoin to the Ethereum blockchain, by tokenising real bitcoin. The project responds to a real market demand since Bitcoin is the first and most successful cryptocurrency. The project was born in 2018 by the joint efforts of major players in the space: Kyber Network, the Ren Project and BitGo. With the recent development of the DeFi ecosystem, WBTC has a strong momentum of development.

WBTC Smart contract Risk: B+
Since its launch in January 2019, the number of transfers has exceeded 1.2 million.

WBTC Counterparty Risk: C+
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 is not easily available, accessible on some DeFi platforms with a low volume. Redemption of WBTC for the underlying asset requires KYC and a merchant license by the WBTC consortium, and the liquidity on the market is relatively low.
WBTC has suffered market manipulation on Kyber exchange leading to a 60% drop in price. Still WBTC tracks the price of BTC which is not too volatile compared to other currencies considered.
Since WBTC is backed by the first and most successful digital currency BTC we consider some of these risks mitigated by BTC’s wider market which we use as market feed for the protocol’s oracle.

WBTC Market Overall Rating: B

UNI

UNI is the governance token of Uniswap Protocol, the DEX with the highest volume.

UNI Smart Contract Risk: B-
The UNI token is audited and has been impressively battle tested, over 1.8 million transactions, for such a short life. The smart contract uses some of COMP’s token code which has been tested by the markets.

UNI Counterparty Risk: B+
UNI is a permissionless token launched in some of the fairest ways witnessed. The Uniswap team, which has an impressive track record, will be giving up power over the protocol gradually over the next months.

UNI Market Risk: B+
The UNI token has been really well received by the community. The price quickly increased from nothing then falling back down 50%, and now it has reached a new high, with high volatility. The market capitalization now is ranked as TOP 15.

UNI Market Overall Rating: B+

YFII

YFII Finance (DFI.MONEY) is a community-owned DeFi infrastructure where its users determine what products they want and enjoy the yields. It’s permissionless for all the people to join. YFII is the governance token of DFI.MONEY.

YFII Smart Contract Risk: C-
The YFII token is audited and the minting keys have already been burnt by transferring the admin role to the blackhole address (0x00) so that no one has this privilege to mint new tokens.

YFII Counterparty Risk: B-
YFII is fully decentralized, its distribution to liquidity providers is fair and transparent. The community is already strong of 8,900 holders.

YFII Market Risk: B-
After the $120 defense battle, YFII’s price initially went to a peak of $8,548. For now, prices and market capitalization are relatively stable. At the same time, due to the influence of the futures market, the short-term volatility is still large.

YFII Market Overall Rating: C+

LRC

Loopring is a zkRollup Exchange and Payment Protocol.
LRC (V2) is the token of Loopring protocol.

LRC Smart Contract Risk: B
The LRC (V2) was deployed in April 2019, the latest public audit reports are provided by Least Authority.
It is widely available on various exchanges, with more than 400,000 transfers.

LRC Counterparty Risk: B+
LRC is non-custodial and open source, with over 80,000 holders, hence presents low centralisation risk.

LRC Market Risk: B
Due to the skyrocketing price of ETH and expensive gas fees, as one of the layer 2 scaling solutions of Ethereum and the first zkRollup-based Layer2 on Ethereum, Loopring’s transaction volume and price continued to rise in the second half of 2020. The increase in the application of LRC (Loopring Protocol) may make a large number of users have higher expectations for this network, however, there are still certain market risks and high volatility.

LRC Market Overall Rating: B

xLON (LON)

Tokenlon is a decentralized exchange and payment settlement protocol based on blockchain technology.

LON is a utility token issued by Tokenlon, used to align all parties involved in the ecosystem and incentivize participation and expansion of the ecosystem.

Stake LON to obtain xLON tokens as staking certificates that capture staking rewards. The value of xLON increases in proportion with distributed staking rewards. This makes the exchange ratio between xLON and LON continue to rise and xLON : LON ≥ 1.

xLON Smart Contract Risk: B-
LON was deployed in December 2020, nearly 400,000 transfers till now, the latest public audit reports are provided by PeckShield.

xLON Counterparty Risk: B
LON is non-custodial and open source, with around 50,000 holders, hence presents low centralisation risk.

xLON Market Risk: C+
Since the launch of LON, the price has experienced a surge. Due to the downturn of the entire crypto market, it has now fallen back. With the smooth operation of the xLON mechanism, its price gradually stabilized.

Compared with its lower market capitalization, LON has good liquidity in both CEX and DEX, which is very important, which will help it to be recognized and held by a wider range of users in the future.

xLON Market Overall Rating: B-

RAI

Reflexer is a platform where anyone can use their crypto collateral to issue true stablecoins which are not pegged or linked to fiat.

The first stablecoin which can be minted on Reflexer is RAI, a pure ETH backed asset

RAI Smart Contract Risk: B-
RAI was deployed in Feb 2021, nearly 67,000 transfers till now, the latest public audit reports are provided by the leading blockchain security firm OpenZeppelin.

RAI Counterparty Risk: B
RAI is minted by collateralizing ETH. Since it has been online for a short time, currently only has about 2,000 holders, not decentralized enough.

RAI Market Risk: C+
The price of RAI has been stable around 3.14 USD (this value is the initial setting value of the protocol = Pi) for a long time.

Compared with its lower market capitalization, RAI has good liquidity in DEX, which will help it to be recognized and held by a wider range of users in the future.

RAI Market Overall Rating: B-

Pending Assets (not listed yet)

MASK

Mask Network is the core product of Dimension, it integrates decentralized social messaging, borderless payment network, decentralized file storage and sharing, decentralized finance, DAO and NFT to provide a safe and convenient portal for users to jump right into the continent of decentralized finance and then the new world of Web 3.0.

MASK is the token of Mask Network.

MASK Smart Contract Risk: C-
MASK was deployed in Feb 2021, nearly 100,000 transfers till now, the latest public audit reports are provided by SlowMist.

MASK Counterparty Risk: B-
MASK is non-custodial and open source. Since it has been online for a short time, currently only has about 6,500 holders, not decentralized enough.

MASK Market Risk: C
In general, due to its short launch time, it has experienced slightly greater volatility, but basically the MASK trading market is still at a healthy level.

Compared with its lower market capitalization, MASK has good liquidity in CEXs and DEXs, which will help it to be recognized and held by a wider range of users in the future.

MASK Market Overall Rating: C+

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