N-SCOSS rating update — Full of changes and opportunities for underwriters!
At the beginning of Q4 2021, the team wanted to update the N-SCOSS rating for the protocols listed on Nsure’s decentralized app. Since the last evaluation, conducted in March 2021, these protocols have experienced changes on TVL, Smart Contracts versions, and even some attacks that result in a substantial impact on the protocol’s security.
The assessment is now completed. Updated N-SCOSS and security level for each protocol will be in effect from 2021 January 10th 9:00AM UTC.
Three protocols (Uniswap, Dodo, Yearn Finance) got their version updates; thus, the N-SCOSS was assessed on their latest smart contracts. The evaluation concluded an overall improvement on the security level. Since the last update, 7 protocols were upgraded, just 1 protocol was downgraded, and the other 14 protocols remained at their security level. Details are shown in the chart below:
Principal factors that affect the rating
There are primarily 3 main factors that contribute to the change of the protocols’ N-SCOSS rating.
1. Exploits occurred in the past 12 months.
Compound v2, Maker, Curve and Badger DAO experienced attacks out of smart contract vulnerabilities that fall under our policy coverage, therefore their score of Pillar One got deducted. Especially for Compound v2, the 2 hacks are the critical factor that led to its downgrade from level 5 to level 4.
2. Market share.
Out of 22 protocols rated, 12 protocols gained upward market share, which means higher TVL % or a stable TVL % over a longer period of time. On the other hand, 6 protocols showed downwards, and 4 had no significant market share change. Balancer v2 obtained the most credit (35 points) and achieved a security level upgrade out of this benefit.
3. Developer activities
The majority of the protocols got an improved score in Pillar Five, resulting from either an increased bug bounty reward (12 protocols raised the reward) or an increased number of issues under discussion in their github repository. Note that the number of issues taken into account was different from the last evaluation, changing from counting open issues only to open+closed issues, and the tier bands were altered correspondingly. Such adjustment is to better reflect all historical discussion in github repository and hence a more precise measure of the developer activity.
For the 8 protocols whose security level was rated differently from last time, we’ve made the below summary to help users better understand the reasons for the change.
Premium will alter accordingly, as shown in the below table.
Opportunity for underwriters
For underwriters of upgraded protocols, staking power will be released as now those protocols are subject to higher leverage ratio. Downgraded protocols, on the contrary, will consume more staking power to balance its risk. Overall, most underwriters shall benefit from the rating update as now the average leverage ratio is increased.
Underwriters are advised to examine their account to re-allocate their NSURE in order to achieve desirable return.
About Nsure Network
Nsure is an open insurance platform for Open Finance (DeFi). The project is inspired by Lloyd’s of London, a market place to trade insurance risks, where premiums are determined by a dynamic pricing model. Capital mining is implemented to secure the capital required to back the risks at any point of time. To learn more about Nsure Network go to Nsure.Network or follow us on Twitter or Telegram.
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