Stablecoin Rating Platform Bluechip Launches to Provide Transparency into Stablecoin Safety & Risks to All
July 13, 2023 – Washington, DC – Bluechip, a nonprofit organization dedicated to evaluating stablecoin safety, launched today to provide unbiased ratings of top stablecoins so that anyone, regardless of their technical expertise, can easily understand which stablecoins are likely to be safer.
Bluechip's initial donors include: MakerDAO Co-Founder Rune Christensen, Reserve Co-Founder Nevin Freeman, StarkWare Co-Founder Eli-Ben Sasson, InnovaticGroup and others. Notable advisors are renowned economists Tyler Cowen, Robin Hanson, Alex Tabarrok and Lawrence H. White, as well as Ameen Soleimani. The full three-person team is CEO Benjamin Levit, Chief Economist Garett Jones and Ratings Director Vaidya Pallasena.
Garett Jones, Chief Economist at Bluechip and economist at George Mason University, shared, "Last year’s Terra/Luna collapse demonstrated that many people who were using stablecoins were unaware of risks that were obvious to many experts. People who want a safe, legal, and easy way to make and receive payments, but aren’t experts on monetary economics, need a simple tool and a clear grading system so they can decide which stablecoins to use. Stablecoins offer a way to potentially reduce the risks of inflation and even hyperinflation, but users need better information about which coins are more reliable. This is why we're excited to announce the launch of Bluechip today."
Rune Christensen, Founder of MakerDAO and a donor to Bluechip, said, “We really need something like this. It’s great that the Bluechip team has stepped up to make it happen, and I hope others will donate too and make this new approach to stablecoin evaluation possible as a nonprofit."
Bluechip's stablecoin ratings are built on the SMIDGE rating framework, designed by the three founders. SMIDGE reflects Stability, Management, Implementation, Decentralization, Governance, and Externals:
Stability looks at whether a stablecoin has held its peg and has an appropriate mechanism to likely hold its peg in the future. It’s evaluated on the following subcriteria:
Reserves Management: Quality, quantity, storage and segregation of reserve assets
Market Feedback: Indicators of market's confidence in a stablecoin derived from price and trade data
Mechanism: Stabilization methods that protect the stablecoin
Management looks at whether a stablecoin's management team, if it has one, appears competent and scandal-free.
Implementation looks at risks arising from smart contracts and oracles. It’s currently not assessed, but Bluechip plans for it to be evaluated in the future.
Decentralization looks at whether there is any concentration of control in the hands of one or a small number of parties.
Governance looks at whether adequate systems and measures are in place to reasonably protect stablecoin holders against abuse and reserve misappropriation by bad actors inside the stablecoin project.
Externals is SMIDGE's room to grow: Bluechip hopes that sophisticated futures and betting markets will develop to offer information about the risks of particular stablecoins. Over time, we hope to incorporate sentiment indicators and crowdsourced reports that could offer additional insight into the risks of different stablecoins.
“Everyone says crypto needs to self-regulate, but nobody ever does anything because there’s no big money to be made. Stablecoin ratings are an obvious necessity after the UST collapse, and it’s great to see such a credible and well-meaning team taking on the challenge,” said Nevin Freeman, Co-founder of Reserve and backer of Bluechip. “They have my full support, and I really hope they become as popular as CMC and CoinGecko, so that the next UST isn’t able to swindle so many people.”
Bluechip initially offers ratings for 15 stablecoins, including Binance (BUSD), Liquidity USD (LUSD), USD Coin (USDC), Pax Dollar (USDP), Gemini Dollar (GUSD), Tether (USDT) and more with plans to continually expand the list over time.
Want to learn more about Bluechip? Get started at bluechip.org and follow them on Twitter.
For media inquiries, please contact Margaret Hyde at (310) 260-7901 or Margaret(at)MelrosePR(dot)com.
Bluechip is a nonprofit dedicated to evaluating stablecoin safety, giving letter grade ratings to the most important stablecoins, and sharing conclusions with the world at no cost.