Blockworks

S&amp;P Global Ratings has partnered with Chainlink to publish its stablecoin stability assessments on-chain.



The collaboration uses Chainlink’s institutional-grade DataLink oracle infrastructure to deliver S&amp;P’s independent stablecoin risk evaluations directly to decentralized finance (DeFi) applications and institutional systems.



The SSAs rate a stablecoin’s ability to maintain value parity with fiat currencies on a scale from 1 (very strong) to 5 (weak).&nbsp;



While not formal credit ratings, the assessments analyze key factors such as collateral quality, liquidity management, and governance controls.&nbsp;



By embedding these evaluations into smart contracts through Chainlink’s decentralized network, DeFi protocols and investors can access real-time stability insights for automated risk management and lending decisions.



Chuck Mounts, Chief DeFi Officer at S&amp;P Global, said the launch reflects the firm’s aim to “meet clients where they are” as institutional adoption of digital assets accelerates. Chainlink co-founder Sergey Nazarov called the integration “a critical step” in enabling traditional market standards to guide on-chain finance.



The move follows S&amp;P Global’s 2023 debut of its Stablecoin Stability Assessments and expands the company’s data reach into blockchain ecosystems. It also aligns with broader efforts to bridge traditional finance with DeFi, joining similar Chainlink integrations from institutions like Deutsche Börse and the U.S. Department of Commerce.



S&amp;P Global Ratings’ collaboration with Chainlink builds on a gradual expansion of its digital asset coverage since 2021. 



The firm has previously analyzed stablecoin reserves, crypto-backed lending, and tokenization frameworks across traditional credit markets. In December 2023, S&amp;P launched its first stablecoin assessments, evaluating tokens USDC, USDT and others.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Chainlink

S&P Global and Chainlink launch on-chain stablecoin risk assessments

Casey Wagner

<div id="highlights-block_627976653708e" class="highlights">
 <ul>
 <li>The DeFi protocol is the first to receive a credit rating from S&amp;P Global Ratings</li>
 <li>Low capital base, increasing regulatory scrutiny and return obligations were areas of concern for credit raters</li>
 </ul>
 
</div>



The first institutional DeFi company rated by S&amp;P Global received a B-, or junk, grade.



S&amp;P Global Ratings has assigned Compound Prime a B- long-term credit rating. It is the first time an institutional DeFi (decentralized finance) offering has been rated by the agency,&nbsp;



Compound Prime, a Compound Labs subsidiary, has a stable outlook, but ratings issuers cited uncertain regulatory conditions around stablecoins and Compound Treasury’s currently “very low” capital base — as well as its 4% return obligation — as concerns.



Compound Prime oversees Compound Treasury, the company’s security offering that converts US dollars to stablecoin USDC and secures accredited investors a 4% return, according to Reid Cuming, Compound Treasury’s general manager.&nbsp;



The Treasury offering was first announced in June 2021.&nbsp;



A B- rating, a junk rating six levels below investment grade, means the business is more vulnerable to adverse financial conditions, although it “currently has capacity to meet financial obligations,” S&amp;P Global Ratings said in its <a href="https://www.spglobal.com/ratings/_division-assets/pdfs/guide_to_credit_rating_essentials_digital.pdf?utm_medium=cpc&amp;utm_source=google&amp;utm_campaign=Brand_S" target="_blank" rel="noreferrer noopener">explanation</a>.



“As part of ongoing discussions with S&amp;P, Compound Treasury’s ratings could be upgraded in upside scenarios such as greater regulatory clarity for the digital asset industry, or a longer track record of stable performance,” Cuming said in a <a href="https://medium.com/compound-finance/compound-treasury-sp-credit-rating-897aff3a6f8c" target="_blank" rel="noreferrer noopener">statement</a>.



S&amp;P choosing to assign a DeFi protocol a rating, which Compound said is a first, shows that greater adoption is coming, Cuming said.&nbsp;



“Over time, traditional financial markets and DeFi will converge,” Robert Leshner, Compound’s founder, <a href="https://twitter.com/rleshner/status/1523671242922147840?s=20&amp;t=53W-DwecPjQVgf7gkS7Fug" target="_blank" rel="noreferrer noopener">tweeted</a>. “Compound Treasury is one of the products accelerating this transition, by offering institutions a cash-management product powered by the Compound protocol.”



Ratings will become more common, Lesher added, which will help to foster institutional demand.



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