ETHMilan26 Credora — Risk assessment comes to DeFi

Transcript

Hello and good morning. This talk is going to be in English. I'm Italian, as you can probably guess by the surname, but you know, in order to cut it to our English speakaking guest, we're just going to do this in English. We're going to talk a little bit about risk and specifically why risk is important in DeFi. We never really care too much about risk until very very recently. And I want to take you through this over the next maybe 10 15 minutes.

A bit of context beforehand. In Restston, we are the fastest growing Oracle in the market. We're very modular. We work on 110 chains over 200 client and like 13,400 assets by now. So as you can see we have a very strong presence in the D5 ecosystem. And this strong presence in the D5 ecosystem is because we build for DeFi. We always cather to DeFi. We are trusted by some of the biggest players that are native D5 players. And now as more recently we've been looking into institutions.

We've been looking into RWAS. So we are striking partnerships and collaboration with a number of these new institutional people that are coming to DeFi. A name that is important to mention is securityize. We are the official oracle for securityize. Securityize is the number one tokenization player in the space. Um and and obviously we created this partnership with them because it's very very important for us to bring secure reliable infrastructure also to these new people this new institutional people that moving to DeFi.

When I started in the Oracle business, it was quite a bit ago and at the time our mandate was to just provide reliable and secure price data and it was enough for an hour to just do that. There was nothing needed beside that. All the use cases were very much on you know the more blockchain like DJ side of things. So it was very important to provide this price in a timely manner in a secure manner in a reliable manner. But now while that requirement is still present and it will never go away hopefully there are many many more use cases that

came to D5. Therefore, we expanded our offering and now we cover a number of use cases that you see. So, we still have the Oracle feeds that is a use case specifically for D5, but now we also have ultra fast feeds with our hyperquid tree protocol uh pro um and product. We have proof of reserve that is very important for RWA and stable coins. Uh we have risk which is Credora that is the company that we're going to talk about today. But also we have historical data. We have data for AI agents. Now we're working and we just released a

product to provide instance settlement to RWA through secondary liquidity. So there is a number of use cases and I do personally believe that an Oracle needs to have that today to really compete in the market. Institutions as you know better than me they do not want to go to five six different providers for five six different things. They are quite similar but not exactly the same thing. It's much easier to just provide a onestop shop where you can actually help these people tokenize. You can actually help these people not only create a price data for their asset but also

propagate it and make sure to fulfill as many use cases as possible. In September 2025, our friend Vitalik tweeted something quite interesting and quite timely. He was saying that loris defy can be for Ethereum what search was for Google. And it's a very interesting angle like many of the Vitalic tweet. It's a little bit provocatory but it's very true. There's always in traditional finance two sides of an investment. The two two sides are return and risk. And in blockchain, we always thought about

return mostly and nobody really talked about risk. But risk is very important. It's the other uh face of the same metal. And I'm saying this tweet is particularly timely because in 2025 we acquired Credora Network and Credora Network was and is the leading risk rating provider for web trade. In traditional finance risk is a known well accepted well famous concept.

Whenever you have an ETF or whenever you have a traditional finance product you need to get a risk rating. That's just how it works. In DeFi, we don't have that and Credora brings that to the DeFi space. Same month, September, we started standardizing our risk methodology throughout DeFi and we went through a couple of iterations to that. Obviously, Credora had their own methodology to start with and then we improved it and we iterated on that.

We landed on something that's a bit simpler than what is the traditional finance risk assessment. So the risk assessment in traditional finance goes from AAA all the way down to D or I think triple C. But in DeFi what we have is ratings from A+ to D with half a rating increment. So it goes A plus A a minus and so on. But ultimately the metric that we calculate is the same. is called PSL which stands for probability of significant loss which is how likely it is to experience bad depth exceeding 1% of the principle over a year period.

Very financial jargon but effectively this is the unique number that tells you how risky a specific asset or a specific vault or a specific market is. The other thing that for us was very very important was for Credora to be transparent. And while obviously this is a security assessment and a risk assessment, you cannot be 100% transparent on the way that you do the calculation and the algorithm that you have to calculate risk because that will expose effectively a risk factor and a way for people to game the system. Our methodology is 100% public and it's 100% on our documentation. So you can see

exactly what are the factors that we take into consideration when we actually assess the risk of a specific vault or a specific asset or a specific market. And the goal is obviously you know to bridge institutions and the precision of trfy with the dynamism and the speed of defi. So, we solved what I believe is the biggest problem of traditional ratings, which is speed. In traditional ratings, you get a spot rating for a specific moment in time, and that is usually the same for six months if everything goes well. Sometimes it's

more than six months. In Credora, we are an infrastructure company as as Treadstone obviously. So we deploy infrastructure to monitor these factors and our ratings update within 24 hours. And you say why within 24 hours and not instant? There is a good reason for that which is you don't want too many rating updates. You know when stuff changes when people are moving liquidity from one side to the other but we get notified instantaneously by our infra and then our quant take care of updating the rating within a few hours.

We focused on three main verticals because we believe that these are the three more important verticals in defy that need rating. Assets on one end they need to have you know a foundational risk assessment because at the end of the day asset is the basis of everything that gets constructed on top of it. All of the markets, all of the strategies, all of the vaults. If the asset is not secure, they're not secure as a result. And then obviously we go into markets. So we work a lot with risk curators like KBK for example Gretlet Steakhouse Centtor so on so forth to rate their own markets. As of today, we rated 100% of

Spark saving markets and vaults and 90% of morpho vaults by TVL. So it's very very important that we give as much coverage to the last of the three points which is exactly vaults. So we're working with a lot of lending protocols as well the ones that you know to make sure that everywhere we can find risk data and risk assessment. This image is a little small but it tells you a bit more in depth how we map our rating to the traditional rating primitives. Right? So in trfy you see that you know there is like a a plus a a

minus and they all correspond to our a+ rating and then you can map effectively one to many the credora ratings with the traditional finance rating. As I was saying before the factor ultimately it's always one which is the PSL. So and that is the result of our algorithmic calculation and our quant assessment that takes into consideration I think over 120 different indicators for each individual markets and each individual asset but ultimately gets to one number and this is the number the PSL. So if you fall as an asset or as a vault as a market within a certain range of PSL that's going to translate into one rating.

Why the standard? Mostly because D5 people like myself don't know about all of the rating standards and all of the big reports and they cannot really make their mind up on these individual factors. So we wanted to summarize that into one number, one letter so that it's very very easy to understand and at the same time for traditional finance people we do produce 22 to 25 pages report for each of the things that we rate that go in depth into all of these factor and into all of these calculations but they are a supporting material effectively to the letter. So if you are a more traditional

finance-minded person and want to see the report, it is there and is very complex and is very thorough. But we wanted to make sure that this catered to both very very experienced financial people and also D5 people that don't know anything about risk rating like myself. As I was saying, we are live. We cover now over 10 billion dollars in TVL. That number is actually much higher now. This this slide needs to be updated but we have 127 bolt rated. We have 250 more for markets rated and it's very very important and I'm not just saying to you this numbers to show off but we're pointing it out because it's important to cover as much of the industry as

possible. At the end of the day, as I was saying, standard risk rating are a thing in traditional finance and they need to be a thing in DeFi if we want to grow up onto the next stage of finance. So, we care a lot about these numbers because we want to make sure that we provide rating assessment across the board in as many places as possible. And an objection that you know we were having at the beginning and we were also asking ourself at the beginning was okay we were doing this risk rating this is great we all know that these help but are these a nice to have or is this something that is actually needed in DeFi is it too early for DeFi to go into

risk rating is it such a mature primitive turns out it's not too early because these actually move markets and and inform people decision. When we rate a spark, this was in March this year, we publish the risk rating across the old Spark saving markets and 5 days later their investment in USDTs and their deposit grew by $200 million plus. Now this market that used to be about $350 million in March before we launched service rating is $1.3 billion.

And as much as coronation and causation is not the same thing, this is a pretty strong correlation that I like to point out. Now with all the risk with all the acts that we experience it's very very important that we understand the risk and this is effectively what we provide. I want to take you over the next minute or so just to wrap up on the new things that we launch. We just launched a dashboard where you can see all of the risk rating all in one place. That's also important right because you can compare it. You can simulate your portfolio. You can either connect your wallet, give a wallet address or even

just combine it yourself and you get an instant calculation of what is your risk of the portfolio on average. It's app.crredora.net network. Go check it out. We just launched this in alpha version. So if you have any feedback, please do come to us with feedback. But there's going to be much more. There's going to be alerts on when the risk rating change. There's going to be a lot of comparisons and a lot of simulations and data that we're bringing. well much uh of interest this particular product we do believe that it provides the transparency needed and in terms of what's next we already seen people making financial decisions on risk rating but also they're making

products based on risk rating we work with companies like catalysis that does insurance on morpho part of their premium calculation comes from kadora risk rating we work with lending protocols like notice where part of their APY calculation comes from the risk rating of Predora. We work with curators such as KPK for example and Gret that uh do require risk rating as part of their due diligence when it comes to uh deciding if an asset can be listed and and is secure enough to be listed. This obviously not the all part the old due diligence because they do much much more but this is an indicator.

So we do see credora coming more and more into the profile of decision making of people across defy. Please do build with us if you want to reach out. These are our contacts. You can go to reson.inance especially in our documentation section. You find a lot around our methodology. You find a lot around everything that is the details on how we do rating. but also follow us on X and that is the best way to get updated information on what we've been up to and what we're working on.

In the meantime, thank you so much. I was Mike Masai. Thank you for your time. Thank you, Mike.