Exponential, an investment platform specializing in DeFi assessments, has downgraded the USDA stablecoin’s rating from “Lowest risk” to “Low risk.”
The methodology applied in this rating is based on analysis of DeFi protocol risks, including lending design, collateral quality and governance dynamics.
This change primarily stems from concerns over the heavy reliance on the external protocol Morpho Blue, where over 50% of USDA’s collateral is deposited.
Morpho, a relatively new and less battle-tested money market, introduces a potential single point of failure.
The downgrade also follows a similar incident involving the Euler hack in March 2023, where Angle’s reserves were compromised, underscoring the risks of external dependency. During that incident, $17.6 million of Angle’s USDC reserves were affected due to the hack on Euler.
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