Set Protocol

Set Protocol receives a B- risk grade (28/100) from Hindenrank, where lower scores indicate lower risk. Set Protocol is a well-established, battle-tested infrastructure layer for on-chain structured products with a strong track record since 2020. The permissioned manager model provides flexibility but creates trust dependencies. Best suited as infrastructure for professional managers and DAOs (like Index Coop) rather than direct retail use. Lower risk profile than most DeFi protocols due to its infrastructure-only role and long operational history. Set Protocol is the smart contract infrastructure that powers on-chain structured products, most notably used by Index Coop to build products like the DeFi Pulse Index (DPI). SetTokens are ERC-20 tokens that represent baskets of crypto assets, similar to ETFs in traditional finance. Users can mint SetTokens by depositing the underlying assets, and redeem them to get the assets back. Professional managers create and rebalance these products, charging streaming fees. The protocol also supports advanced strategies like leveraged tokens and yield farming through modular integrations with other DeFi protocols.

The key risks identified for Set Protocol are: (1) SetToken managers control rebalancing decisions, creating trust dependency on manager competence and honesty (2) Holding a SetToken exposes you to smart contract risk of every constituent token in the basket plus every integrated DeFi protocol (3) Redemption of SetTokens with illiquid constituents may result in significant slippage (4) No protocol-level governance token means limited community oversight of infrastructure decisions

Set Protocol scores 28/100 across eight risk dimensions: Mechanism Novelty: 2/15, Interaction Severity: 5/20, Oracle Surface: 3/10, Documentation Gaps: 1/10, Track Record: 3/15, Scale Exposure: 3/10, Regulatory Risk: 3/10, Vitality Risk: 8/10. The highest risk area is Vitality Risk at 8/10.

Among 68 rated DeFi protocols on Hindenrank, Set Protocol ranks #12 by safety (lowest risk score = safest). Its 28/100 risk score and B- grade place it among the safer DeFi protocols.

Set Protocol scores 3/15 on the Track Record risk dimension, indicating some history of security incidents or exploits. Higher scores reflect more severe or frequent incidents. Review the full risk report for details.