S&P Global Chainlink Partnership Brings Stablecoin Ratings On-Chain

Key Takeaways

• S&P Global Ratings has brought its Stablecoin Stability Assessments on-chain via a partnership with Chainlink.

• These assessments are now accessible through Chainlink DataLink and can be integrated directly into DeFi protocols.

• The assessments evaluate risk factors such as collateralization, custody, liquidity, and governance.

• Initially launching on Base, the evaluations may expand to other blockchains depending on demand.

• This move comes at a time when stablecoin transparency is more crucial than ever due to recent market volatility.

S&P Global Ratings Now On-Chain Via Chainlink

Announced earlier this week, the S&P Global Chainlink partnership enables stablecoin stability rankings to be published directly on-chain.

These assessments, first introduced in 2023, will now be made available via Chainlink’s Data Streams and hosted on Chainlink DataLink, an institutional-grade, decentralized data solution.

By going on-chain, these stability assessments can now be seamlessly integrated into DeFi protocols, smart contracts, and other blockchain-based systems, offering real-time access to critical risk data.

Why This Matters Now

The announcement comes shortly after a significant market correction that triggered massive stablecoin de-peggings and liquidation events.

These recent disruptions highlighted the urgent need for transparent and reliable risk metrics that can be accessed directly within DeFi ecosystems.

How The Assessments Work

The Stablecoin Stability Assessment (SSA) is not an official credit rating, but it assigns a 1 to 5 risk score based on the token’s ability to maintain its peg to fiat currencies.

Key Factors In The SSA

S&P Global evaluates each stablecoin using a wide range of criteria, including:

• Market Value and Custody Risk

• Collateral Requirements and Liquidation Mechanisms

• Governance and Regulatory Compliance

• Redeemability and Liquidity

• Technological Infrastructure and Third-Party Dependencies

These scores apply to both asset-backed and algorithmic stablecoins, helping users and protocols differentiate between levels of inherent risk.

Chuck Mounts, Chief DeFi Officer at S&P Global, said:

“The launch of SSAs on-chain through Chainlink underscores our commitment to meeting our clients where they are.”

Chainlink’s Role In the Integration

As the most widely used oracle network, Chainlink plays a critical role in bringing off-chain data onto the blockchain in a secure and decentralized way.

By leveraging Chainlink’s proven oracle infrastructure, S&P Global ensures that its data is:

• Tamper-proof

• Verifiable

• Immediately usable within existing DeFi systems

Sergey Nazarov, co-founder of Chainlink, noted that the network will be able to deliver these rankings to some of the largest institutions in the world, expanding the credibility of stablecoin risk evaluations across traditional and decentralized markets.

Launch On Base, Expansion Expected

Initially, the stablecoin assessments will be published on Base, Coinbase’s Layer 2 Ethereum chain. However, both S&P Global and Chainlink have confirmed that future expansions to other networks will depend on market demand and client feedback.

With the stablecoin supply exceeding $300 billion, and over 70 stablecoin variants available, the need for transparent and standardized risk assessments is greater than ever.

LINK Token Performance

Despite the significance of the news, Chainlink’s native token (LINK) traded relatively flat at around $18.30, down from its recent local high of over $21.

This stability may indicate that the market has already priced in Chainlink’s growing institutional adoption.

FAQ

What is the S&P Global Chainlink partnership?

The partnership enables S&P Global’s Stablecoin Stability Assessments to be published on-chain using Chainlink’s decentralized oracle infrastructure.

What are Stablecoin Stability Assessments?

They are evaluations of a stablecoin’s ability to maintain its fiat peg, with scores ranging from 1 (least stable) to 5 (most stable) based on various risk factors.

Where can the assessments be accessed?

The data is published via Chainlink DataLink and will initially be available on Base, with plans to expand to other networks.

Are these assessments the same as credit ratings?

No. While they are provided by S&P Global Ratings, the SSA is not an official credit rating but rather an independent risk evaluation specific to stablecoins.