Exploring the DeFi Ecosystem

Decentralized Finance (DeFi) presents limited risks to the mainstream financial system as, barring stablecoins, it is largely separate and not yet systemic in size. Nevertheless, alongside market and liquidity risks, fraud is a significant risk with DeFi transactions.

While a smaller rating agency is hardly able to slow down enthusiastic investors, but – on the contrary – emphasizes the opportunities, the warnings of one of the leading rating agencies cannot be ignored.

Hardly any development on the international financial markets is not commented on by one of the leading credit rating agencies. The rating agencies also provide valuable descriptions of market conditions and dependencies. It is therefore remarkable how little has been said so far about cryptocurrencies and Decentralized Finance (DeFi).

That is now changing with a comprehensive documentation presented by one of the three leading rating agencies. So far, mainly a smaller rating agency, Weiss Ratings, has dealt with the market with a certain euphoria. Now one of the heavyweights among the international credit rating agencies is following suit.

First, let’s look at recent comments from Weiss Ratings. “No matter how the crypto market is moving,” This is what the rating agency Weiss Ratings, founded in 1971, writes to its subscribers, “there are ways to earn double-digit yields in the exploding sector of decentralized finance (DeFi).”

This agency belongs to the rating agencies in the USA, which are not recognized as a National Recognized Statistical Rating Organization by the US Securities and Exchange Commission.

In the crypto segment, Financial News Anchor Jessica Borg interviews Weiss Crypto income specialist Marko Grujic, editor of Crypto Yield Hunter, about earning interest with tokens that have little to no volatility:

“Even if you’ve never invested in crypto,” says “Weiss Ratings Daily” on April 9, 2022 under the title “Sunset for the Bull”, “chances are you’re hearing about this week’s price action of the largest cryptocurrency by market cap: Bitcoin (BTC). After months of staying in the same trading range, BTC broke out surging near $48,000 and gaining 15% in just seven days. And when the market leader does well, you can expect altcoins — any crypto other than Bitcoin — to follow suit.”

The rating agency uses bold words to promote the belief that other cryptocurrencies will also benefit.

“There are a couple of reasons behind BTC’s bullish momentum”, according to the analysis of the rating agency: “One is a new wave of institutional investors. The second factor is geopolitical instability in the East. In recent weeks, Ukrainian and Russian citizens have rushed to the crypto space in hopes of protecting their wealth.”

What does one of the three leading rating agencies say about these developments?