Market Rating (Layer 3)
The Market is the DeFi protocol that enables investors with excess capital to generate returns by interacting with it, while using the asset either as collateral (in a collateralized loan) or, more broadly, as the main source of risk.
Each Market is set up by a protocol actor and defined by parameters such as the rate curve, oracle-based pricing methodology, and LLTV. Market volatility can be mitigated through constrained setups, making it necessary to evaluate both its robustness and its suitability as an investment position.
The Market is assessed against four criteria: Oracle, Liquidity, Price Fluctuation, and LLTV, with the last two forming the Credit Enhancement, an additional layer that adjusts the Asset Rating.
Market Layer
Criteria
Last updated