Overview

This note details how Clearstar produces the APB Risk Rating, the composite risk score that determines whether a yield opportunity proceeds to Whitelisting or is routed to Improvements & Engagement. It is a part of the Capital Allocation Framework.

The APB Risk Rating combines four input reports into a single, tiered decision:

1. General Due Diligence (cross-cutting risks): from General Due Diligence
2. Asset Due Diligence (the "A"): from Asset Due Diligence
3. Protocol Due Diligence (the "P"): from Protocol Due Diligence
4. Blockchain Due Diligence (the "B"): from Blockchain Due Diligence

Each report includes letter grades for each assessment area and a composite numerical score. The APB Risk Rating aggregates these into a final tier (1 through 5), which directly governs whether and how capital may be allocated.

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Automatic disqualification Any single letter grade of F in any assessment area across any of the four input reports results in automatic failure. The opportunity cannot proceed to Whitelisting until the F grade is resolved, either through the Improvements & Engagement feedback loop or by the project addressing the issue independently.

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Process Overview

flowchart TD
    A[All DD reports received] --> FGATE{Step 1: Any F grade?}
    FGATE -->|Yes| IE[Improvements and Engagement]
    FGATE -->|No| COMP[Steps 2–3: Compute APB composite]
    COMP --> TIER{Step 4: Assign tier}
    TIER -->|Tier 1–4| DCHECK{Step 5: Any D grades?}
    TIER -->|Tier 5| IE
    DCHECK -->|No| WL[Whitelisting]
    DCHECK -->|Yes| COND[Whitelisting with D-grade conditions]
    IE --> RERUN[Project addresses issues, DD reruns]
    RERUN --> A

    style FGATE fill:#E8A838,stroke:#B8862D,color:#fff
    style IE fill:#D9534F,stroke:#A94442,color:#fff
    style WL fill:#5BB85B,stroke:#3D8B3D,color:#fff
    style COND fill:#E8A838,stroke:#B8862D,color:#fff
    style COMP fill:#4A90D9,stroke:#2E6BA6,color:#fff

Input Structure

What Arrives at This Stage

Before the APB Risk Rating can be produced, all four DD reports must be complete and signed off by a senior analyst.

flowchart LR
    GDD["General DD (6 areas)"] --> GS[General Score]
    ADD["Asset DD (8 areas)"] --> AS[Asset Score]
    PDD["Protocol DD (8 areas)"] --> PS[Protocol Score]
    BDD["Blockchain DD (8 areas)"] --> BS[Blockchain Score]

    GS & AS & PS & BS --> APB[APB Risk Rating]

    style GDD fill:#E8A838,stroke:#B8862D,color:#fff
    style ADD fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style PDD fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style BDD fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style GS fill:#E8A838,stroke:#B8862D,color:#fff
    style AS fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style PS fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style BS fill:#4A90D9,stroke:#2E6BA6,color:#fff
    style APB fill:#5BB85B,stroke:#3D8B3D,color:#fff

Letter Grade Reference

All four DD reports use the same letter grade scale: