DeFiSafety Certificates

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DeFiSafety is evolving from just publishing ratings on DeFi protocols to issuing safety certificates and we need the support of protocols like Lido. We can’t go into the next bull run expecting investors to DYOR on protocol safety. We have been reviewing Lido since we started in June 2021 and updated in April 2022. We ask Lido to purchase a certificate and support the creation of certificates.

What are we asking for?

  • Pay for the certification. It is an annual payment. At the moment we are considering US $20k per year for very large protocols. This is open to discussion.
  • Support the DeFiSafety quality certification in marketing and discussion.

What do you get?

  • Your site is quality certified by DeFiSafety. This certification should assist investor both retail and institutional about the safety of your protocol.
  • Certification will bring customers! Not understanding risk is a big inhibitor for investors both retail and institutional. Certification brings revenue and will rapidly pay for itself.
  • DeFiSafety certified badge for your website. Badge on our website and our reports
  • Your rating is on the public side of the Protocol score website, not behind the paywall
  • Non transferrable certificates deposited to your wallet addresses allowing wallets to declare yourself certified before users click confirm
  • Ability to participate in developing the revised standards

Why Certificates?

DeFi desperately needs accepted quality standards. Asking investors to do DYOR on safety is ridiculous. It is too complex.

DeFi protocols can be immensely safe, if they follow good processes and have good, mature code. Quality Certificates make determining this easy. A good protocol is transparent about these things and our reviews highlight this. But a protocol can also be designed to facilitate fraud, or just be sloppy in execution. Our reviews have been detecting relative security design and processes effectively for years.

A certificate that the industry supports is the easiest way to communicate safety.

Expecting the user to self research for technical safety is unreasonable. You don’t do it for tires, for gasoline or for mutual funds. Can you imagine reading a rubber deformation report to determine if a set of tires is good for your car in the winter. Of course not. If the snowflake badge is on the tire, you are good. Yet the Lido home page has a list of audits on it. Before the next bull run starts, we must have simple quality standards implemented.

When regulators inevitably look at DeFi, they will impose quality standards as part of the regulation. If we already have working quality standards, they will accept what we use. If we do not have a quality standard (as we are today), they will develop one without much consultation. We need standards today.

Why DeFiSafety?

DeFiSafety has been rating DeFi protocols for almost 3 years. We are an independent and ratings (using our transparent process) is our only product. This means our reputation is vital to us and we strictly maintain it.

Our process is transparent and this keeps us honest, as it does with DeFi. If we cheat, anybody can compare our report with the public data and out us, destroying our reputation.

Can’t a DeFi Protocol just buy a certificate?

Before we can offer a certificate to any protocol, it must have a passing (70%) score, based on our present public report.

Centralization

DeFiSafety is centralized. Though we have been deep in DeFi since early DeFi summer, we chose a centralized format. DeFiSafety is a Canadian incorporated company. Just after we started, Prime Rating , of Prime DAO, tried a fully decentralized rating organization. I supported Luc in this effort. After more than a year, a centralized structure works better. Rating is a not incredibly exciting task yet needs a stable team to build consistent ratings. As a straightforward job, it works.

We are not against evolving our structure or our funding into something more decentralized.

We want to support the space. We want our ratings to become the standard for the industry. We want to be trusted. We do not have a token.

Will Lido consider this proposal?

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The idea could make sense if there is a public framework for how the ratings work and if external parties could aggregate their reviews together. The methodology on the site doesn’t look like it has been updated since December 2021. Are there plans to update/maintain the process? Do you have other protocols that have been on-boarded at certified partners that you could share?

I think the cost is high for posting a badge on the website and providing marketing support. I would say the real value comes from the consumers of this data (wallets or similar) being able to recommend / discover high quality projects vetted by a trusted rating body…

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Thanks for the reply.

We have involved the protocols in the public revision of our process as much as possible. There is still no culture of working groups supporting organizations like DeFiSafety yet. The staff of the protocols (except for the very large ones) is very limited and they do not have the bandwidth to support upgrading standards. We hope to improve this. With certifications, the protocols are more invested in the standard, and we hope to get greater participation in the future.

We have not updated our process primarily because our focus has been on revenue generation in order to survive. For this reason, we have been adding new products rather than revising our existing ones. These include Detailed Reports, Pre-Audit Reviews and the Security Framework. The Certifications are the latest new product.

Certifications are brand-new. AAVE is in process of accepting and Maple has indicated interest. We will be reaching out to other protocols later this week. We scale the price based on TVL. AAVE was $15K, most other protocols are $10K. The funding largely covers salaries. $10K is basically a month for our minimal staff of 2.5. As I indicated, we are working hard for a business model that maintains our independence yet can support the staff needed for generating the reports.

The real value will for consumers. But we need active participation from the protocols to help add this to the culture of defi. It is one brick in the basic infrastructure defi needs to thrive. We ask for your support both financially and in spreading the word.