Documentation Index
Fetch the complete documentation index at: https://docs.rosetta.sh/llms.txt
Use this file to discover all available pages before exploring further.
Risk Score
Every lending market receives a deterministic risk score from 0 to 100. The score is computed from observable on-chain metrics and protocol characteristics. Same inputs always produce the same score. Lower scores indicate lower risk; higher scores indicate higher risk.
Factors
The risk score incorporates multiple factors, each capturing a different dimension of market risk.
| Factor | What It Captures |
|---|
| Protocol maturity | Track record and battle-testing of the lending protocol |
| TVL depth | Market size and available liquidity |
| Utilization | Ratio of borrowed to supplied assets — higher utilization means less exit liquidity |
| Concentration | How concentrated deposits are among a small number of wallets |
| Collateral type | Inherent risk characteristics of the collateral asset (volatility, liquidity, depeg history) |
| Chain risk | Security and maturity of the underlying blockchain |
Utilization Regimes
Utilization is the single most important real-time risk indicator. Markets behave differently at different utilization levels.
| Regime | Utilization | Implication |
|---|
| Healthy | Below 70% | Normal operation. Interest rates follow predictable models. Ample exit liquidity. |
| Elevated | 70% – 85% | Rates climbing. Borrow demand is strong. Exit liquidity thinning. |
| Critical | 85% – 93% | Withdrawal risk increasing. Rate spikes likely. Suppliers should monitor closely. |
| Emergency | Above 93% | Withdrawals may fail or be delayed. Severe rate spikes. Protocol intervention likely. |
Strategy Classification
Circular classifies lending markets by their yield strategy. Each strategy carries a distinct risk profile.
| Strategy | Description | Risk Profile |
|---|
| stable-yield | Standard lending of stablecoins (USDC, USDT, DAI) | Lowest risk. Returns driven by borrow demand. |
| lst-delta | Lending against liquid staking tokens (wstETH, rETH, cbETH) | Low-moderate. Risk comes from LST depeg scenarios. |
| recursive | Looped leverage strategies where collateral and loan are correlated | Moderate-high. Leverage amplifies both returns and liquidation risk. |
| governance | Lending against governance or utility tokens | Higher risk. Collateral volatility is significant. |
Relationship to Credit Ratings
Risk scores are one input to the broader credit rating system. Specifically, they feed into the Market Risk dimension of Circular’s AAA-D credit ratings. Credit ratings additionally incorporate collateral quality, oracle reliability, and concentration risk for a more complete assessment. See the Credit Ratings page for details.
