Platform Rating (Layer 2)
The platform is the layer that transforms one crypto asset into another. Often, it is a decentralized finance protocol that allows the underlying asset to be wrapped, its yield to be split or leveraged, or used for rehypothecation.
The resulting risk of the outcome token depends on the quality of the decentralized finance protocol or application. A key characteristic of these platforms is that their activities are fully on-chain, enabling users to interact atomically with the protocols. Their scope of action is limited to interactions with on-chain smart contracts, with no off-ramping or transfer of value from crypto to fiat.
However, as key intermediaries in the usage of crypto assets, these entities can affect the value of a token through code vulnerabilities, governance structures, or protocol changes.
The platform rating does not include credit risk criteria; it is assessed on the two other pillars: Issuer and Operational.
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