Decentralized finance analysis company DeFi Pulse has just rolled out a new tool that allows users to evaluate the risks of DeFi protocols.
The Economic Safety Grade tool, which the company is working on in association with digital asset modeling platform Gauntlet, examines factors such as user behavior, collateral volatility, relative collateral liquidity, protocol parameters and smart contract risk.
However, it should be noted that due to the fact that the solution is still under development, it does not take into account all risks.
Each project is assigned a risk profile that ranks it between 1 and 100.
The first two protocols to be evaluated were Aave and Compound, receiving scores of 95% and 91%, respectively. MakerDAO is expected to be the next DeFi project to be assessed.
According to DeFi Pulse, in the current (alpha) version of the tool, "these grades are formed by analyzing the historical liquidity and volatility data to find the collateral most likely to cause issues."
Gauntlet hopes the tool and its risk analysis can help prevent future crises such as the Black Thursday crisis in the crypto sector.
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