Bluechip Gives Synthetix and Beanstalk Stablecoins F Grades; Tokens Added to the ‘Red Flag List’

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On Feb. 1, 2024, the independent, nonprofit stablecoin assessment entity Bluechip made a noteworthy declaration. They officially bestowed an F grade upon Synthetix’s fiat tokens SUSD and SEUR, alongside Beanstalk’s dollar-pegged asset BEAN. Bluechip went on to reveal that both of these stablecoins have been included in the organization’s “Red Flag List,” signaling a strong recommendation against utilizing these particular stablecoin tokens.

SUSD, SEUR, and BEAN Graded F by Stablecoin Rating Organization Bluechip

As per a statement shared on the social media platform X, Bluechip has issued an F rating for Synthetix’s and Beanstalk’s fiat-backed cryptocurrency assets, namely, SUSD, SEUR, and BEAN. These stablecoins join Tron’s USDD stablecoin, which also received an F grade in Bluechip’s June 3, 2023, assessment of USDD.

“Today, we are assigning an ‘F’ grade to the following stablecoins,” Bluechip stated on Thursday. “Synthetix tokens like SUSD and SEUR [and] BEAN by Beanstalk. These tokens are part of Bluechip’s Red Flag List, a list of stablecoins that have triggered a red flag outlined in our framework.” The stablecoin rating agency added:

Synthetix tokens like SUSD and SEUR — Stablecoins like SUSD are minted by staking SNX at a collateral ratio of 500%. SNX is not only the collateral but also the native token issued by Synthetix. SNX is classified as endogenous collateral for SUSD, triggering a red flag. Moreover, these stablecoins cannot be redeemed for the underlying SNX. Holders depend on liquidity pools to exit from Synthetix stablecoins to other assets.

Bluechip also said when the price of BEAN falls below its intended $1, the protocol borrows tokens from holders and subsequently burns them to diminish the supply. Conversely, when BEAN exceeds the $1 mark, new tokens are generated to augment the supply. “BEAN is not backed by any reserves, triggering a red flag,” Bluechip added.

“Governance rights are earned by depositing whitelisted assets,” the nonprofit continued. “However, voting is done off-chain, with decisions implemented by a multi-sig of anonymous contributors. The multi-sig also has unrestricted control over smart contracts as governance enforcement doesn’t exist.”

In the summer of 2023, Bluechip emerged onto the scene, with its founders including Garett Jones, an associate professor of economics at George Mason University, and two innovators behind the SMIDGE rating framework employed by Bluechip. Within their evaluation spectrum, as of Feb. 2, 2024, three stablecoins have garnered an A rating, while two secured an A-. Additionally, five tokens earned a B+ grade, one received a C, and a total of six fiat or gold-backed coins landed with a D rating.

What do you think about the F grades Bluechip gave to SUSD, SEUR, and BEAN? Share your thoughts and opinions about this subject in the comments section below.