Ratings are based on a combination of:
Automated Rating* by DeFi Rating. Our assessment algorithm uses more than 20 different criteria on which each DeFi project can earn more than 30 points.
XXX Token Holder & XXX Liquidity Provider Rating**. Independent DeFi Experts evaluate projects following our rating methodology suggestions.
The Stupidity & Wisdom of Crowd Rating***. Regular customers evaluate project attributes from a usability and profitability perspective.
- Automated Rating is based on a dynamic formula that includes different variables (profile data, ROI, APY, market cap, etc.) and the formula changes daily.
- Experts are influencers and well-known DeFi and blockchain industry players. Experts who have provided at least two independent smart contract audits are upgraded to Auditors - they have higher voting power. Both Experts and Auditors are required to own the LP tokens of the project they are evaluating, before they can cast votes. Voting power depends on the Expert’s/Auditor’s crypto wallet balance, the amount of project LP tokens owned and the audits provided.
- **The crowd or community is regular users that vote for platforms’ usability, customer support and other features, after spending their LP tokens. Users can be upgraded to Experts after proving their professional competence in a particular field.
Ratings are not permanent - we monitor the DeFi projects on a daily basis and every day, new Experts join the platform and rate the projects. If none of the Experts have rated a DeFi app yet, only the technical assessment algorithm is used.
About the Rating System
To rate projects and DeFi products, a system of stars and tokens is deployed. Depending on the current rating, each project will receive tokens according to the star rating - it should be visible to all browser users so they shouldn’t even need to visit the DeFi Rating website to check the stars.
Ratings are not permanent. Projects can influence their own rating by eliminating weak aspects and by improving the user experience. Once they have affected substantive improvements, project teams can contact DeFi Rating to request a re-examination of their performance and data, which might help to change the rating.
Assessment algorithm of the Automated Rating
In our Automated Rating of Projects, the formula comprises several crucial constituents. They are mostly based on financial variables that cannot be manipulated or falsified. Hence, the Automated Project rating is based on numbers and is made absolutely objectively.
The Project rating is based on:
- Total Value Locked in the project. The amount of liquidity in all the project’s pools shows its popularity and whether people entrust their funds to it. The higher the total value, the better.
- Liquidity pools in the project. Here, we assess information about the supported liquidity pools. If the rating is low, there is not enough available data on the pools for users.
- Average pool age. Efficient and profitable pools tend to be more viable. The older the pool, the higher the project's rating.
- Quantity of transactions in the pools over 24 hrs. This number includes deposits, withdrawals and other transactions in the pools. It tracks daily activity and the involvement of users. Projects with a high transaction turnover are rated higher.
- Quantity of transactions in the pools since inception. This is the all-time number of deposits, withdrawals and other pool transactions. It also tracks user activity since the start of the pool's existence. The higher the quantity, the higher the rating.
- 24 hr volume of transactions in the pool in USD. The volume of transactions shows how much liquidity users are ready to provide, which is a tell-tale sign of their trustworthiness and paying capacity. Projects with the largest daily USD turnover are rated higher.