Though the decentralized finance (DeFi) industry has witnessed a great deal of popularity throughout the year 2020, there have always been risks lurking around the industry. These vary from vulnerability exploits to rug pulls, etc. which resulted in the loss of money. For the evaluation and ranking of these risks, DeFi Pulse has introduced a new feature known as Economic Safety Grade.
Created in Collaboration with the Gauntlet Network
As per an announcement, the Economic Safety Grade basically aims at simulating and ranking risks in the decentralized finance industry. Through this safety grade feature, users will be able to identify risks that they encounter while utilizing on-chain DeFi protocols and then they can compare them.
DeFi Pulse has created the Economic Safety Grade in collaboration with the Gauntlet Network a simulation platform for building financial models of blockchain and decentralized finance protocols and apps.
1/ Introducing the DeFi Pulse Economic Safety Grade
Created in partnership with the fine folks at @gauntletnetwork, economic safety grades allow users to more easily quantify and compare the risks they face using on-chain protocols. pic.twitter.com/9Iaw8xrOF0
— DeFi Pulse 🍇 (@defipulse) October 13, 2020
This safety index is most beneficial for average users who find various DeFi protocols complex when they utilize them and find it difficult to compare risks they face on these platforms. The newly-introduced safety grade index will help them in quantifying these risks more easily.
For making an estimate of risks involved in the decentralized finance market, the index will make use of on-chain user data together with the data taken from decentralized as well as centralized exchanges.
What does risk ranking mean?
Furthermore, it has been explained by the Gauntlet Network how this index will operate and calculate risks associated with DeFi protocols and also explained what this risk ranking actually means. If a DeFi protocol has got a score above 90 percent it means that it is very safe and that the chance of loss for depositors is very small.
Similarly, if the score is less than 50 percent then there is likely a chance for substantial loss to depositors in the market.
Source: Gauntlet Network
The Index has already calculated the risks of two famous DeFi protocols Aave and Compound. Both of these protocols gained over 90 percent which means that are absolutely safe and secure.
Report Shows MENA as the Fastest Growing Crypto Market in the World
SEC Hits Back at the Companies Seeking to File ‘Amicus Briefs’ in Support of Ripple
Bitcoin Remains Below $20k, Despite the Hash Rate Hitting an All Time High
Prediction: XRP to Explode by 50% as the SEC-Ripple Lawsuit Nears Conclusion
What Is Boardroom Software and What Are the Best Applications Available in the Market?
Recent Press Release
Preparations For Amulet Mainnet Launch Underway As Launch Date Gets Announced
The Amulet mainnet launch has officially been scheduled for 29th September, 2022. The team unveiled Amulet back in April along...
Yida Gao: Investing in Crypto and Blockchain Industries
Yida Gao has found a ton of success early on with Shima Capital. After launching in 2021, they have over...
Understand the highly volatile nature of bitcoin
The crypto market is highly evolved, and therefore, it has means for everyone to make money. If you have a...
Reasons why people must invest in bitcoins and another crypto!
Bitcoin has been the imperial digital token for ages now. Everyone knows about it, and everyone wants to invest in...
Things to learn when choosing between bitcoin & Dogecoin
When you are about to enter the cryptocurrency market, you are going to get a lot of choices. Of course,...