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DeFi Pulse launches a tool that can analyze the risks of DeFi protocols

E D BE C B B CC FEE C

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TL;DR

  • DeFi pulse introduces new analytical tool
  • Gauntlet partnered with DeFi pulse to build the tool

The renowned analytic platform for decentralized finance (DeFi), DeFi Pulse, in its partnership with Gauntlet, a digital asset modeling network platform, has released a new analytical tool that seeks to assess and compare the level of risk on assets that are on the on-chain protocol.

The tool will be programmed to take things like users’ behavior, collateral volatility of tendered collateral, the collateral liquidity, and even smart-contract risk. However, because the tool is still undergoing development, it cannot assess all of those risks stated earlier.

DeFi Pulse, in a released statement, made it known that the tool, which is still an alpha version, would grade protocols by taking into account the previously available data on liquidity and volatility of the protocols to find collaterals that may likely cause problems in the future.

Gauntlet, on the other hand, says it hopes the tool would be able to prevent Black Thursday crisis in the crypto industry.

How DeFi Pulse Tool grade will work.

The tool is expected to give each protocol a grade between 1-100 after it might have taken all necessary risk and measures into consideration.

According to Gauntlet’s released data, protocols that receive a rating of “above 90” are those protocols that are very safe, and the probability of an investor/depositor losing his investment is almost zero, i.e., impossible.

Protocols with a rating between “80-90” are also safe, but they are not as safe as those with higher ratings. In comparison, protocols with a “65-80” rating could make a depositor lose their deposits, especially when the market conditions are at an extreme. 

Protocols with the “50-65” rating have a higher chance of making depositors lose their deposit in extreme market conditions. Any protocol with a score of less than 50 could make depositors lose even in normal market conditions.

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Kamsi King

King Kamsi is a fintech and digital currency writer and enthusiast. He is keenly interested in blockchain and cryptocurrency and their global adoption. When not busy with writing, he can be found hobnobbing in forums with the best minds in crypto, both developers and startup founders.

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