Layers, Pillars and Criteria

Each Layer consists of several pillars, each of which contains multiple criteria.

The rating associated with a layer reflects the lowest rating among its pillars, as each is assessed independently and the weakest link determines the overall strength of the layer.

Application of the MLRR in practice

Risk Taxonomy and Layered Structure

Layers	Pillars	Criteria
Asset	Issuer Risk	Social
		Decentralization
		Technical
	Credit Risk	Qualitative Assessment
	Operational Risk	Lindy
		Audit Coverage
		Economic Transparency
Platform	Issuer Risk	Social
		Decentralization
		Technical
	Operational Risk	Lindy
		Audits
		Economic Transparency
Market	Oracle
	Liquidity
	Credit Enhancement	Price Fluctuation
		LLTV

Rating Grades

Each Criterion, Pillar, and Layer is rated on a scale from AA (highest quality) to C (riskiest practice).

The following rating scale applies:

Rating	Numeric Score	Type
AA	1	Prime
A	2	Prime
BB	3	High Yield
B	4	High Yield
CC	5	Constrained
C	6	Excluded

The numeric score is used in aggregation calculations across criteria, pillars, and layers.

• AA and A assets or markets are considered Prime and are offered within the lower-risk range of Steakhouse Products.

• BB and B assets are considered High Yield and are offered in the higher-risk range of Steakhouse Products.

• CC assets represent higher level of risks. Exposures in these assets are only taken opportunistically, in constrained amounts, and aligned with specific objectives under strict risk monitoring.

• C assets carry the highest risk rating and are excluded from all publicly distributed vaults.