# Ratings Scale ### Rating Scale We use a letter scale from **AAA to D**: * **AAA–BBB-**: Qualified Grade - Suitable for most risk-aware allocators, given due diligence. * **BB+–B-**: Elevated Grade - For allocators who actively underwrite and monitor risk. * **CCC+–C**: High-Risk Grade - Treat as venture risk to principal. * **D**: Default - Permanent loss event has occurred.
The rating is derived from a **numerical score** based on the framework described below. We publish: * The **overall letter rating** * The **pillar scores** for **Security, Strategy, and Operations** ### Probability-of-Loss Interpretation Our DeFi rating expresses our **view on the likelihood that a user will suffer permanent capital loss** on deposited collateral over the next six months. At this stage of the DeFi market, there is **insufficient long-run default data** to derive statistically robust probability-of-default (PD) curves for each rating band. Accordingly, our scale is: * **Ordinal** (AAA indicates lower loss likelihood than AA, which is lower than A, etc.) * **Informed by structured expert judgement** and comparative analysis across protocols * **Not yet calibrated to precise numerical PD estimates** As we collect more incident data over time, we will: * Measure **incident frequencies per rating band** * Adjust our thresholds and internal PD assumptions as needed * Publish **annual calibration reports** describing how observed outcomes compare to our rating expectations. Until then, ratings should be interpreted as **relative indicators of loss likelihood**, not as exact probabilities. ### Review Frequency and Real-Time Triggers * **Full reassessment** of each protocol at least every **12 months** * **Continuous monitoring** of selected **real-time metrics** (e.g., major depegs, contract pauses, slashing events, large withdrawals, governance changes, negative rate updates) Significant events can trigger a rating invalid until it’s reassessed fully: * A major **protocol upgrade** outside the normal schedule * A **major operational** change, like a new manager, etc. This acknowledges that DeFi is highly dynamic and that a static, point-in-time rating is not sufficient. ### Recency Each rating reflects our current assessment of permanent capital-loss risk.\ We perform a full reassessment every 12 months to incorporate structural and macro changes.\ Because conditions in DeFi can shift quickly, we continuously monitor key quantitative metrics and may update a rating at any time if material risks change. Note: Not all risk factors can be monitored continuously. A rating is most accurate when recent and should be interpreted with increasing caution as it ages. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.stakingrewards.com/defi-ratings/rating-methodology/ratings-scale.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.