Reputation Score
What is the vaults.fyi Reputation Score?
The vaults.fyi Reputation Score aims to give an easy-to-understand metric that evaluates a vault's credibility, performance, and proven track record.
TL;DR
A simple, objective way to assess a protocol is by how "lindy" it is, i.e. "how long has this protocol secured a significant amount of value?"
Scores can be found in our app, and via our detailed-vault API endpoints
How to interpret
Our metric favors the most “Lindy” protocols that have secured large amounts of capital over long periods of time. Vaults with lower Reputation Scores are not necessarily risky – they simply have not been battle tested yet. Our score is meant to supplement nuanced risk reviews from smart contract audits and from leading risk managers like LlamaRisk, Chaos Labs, Gauntlet, et al.
Methodology & Calculations
We break down our Reputation Score evaluation into five dimensions:
1. Protocol Integrity (40%)
Aims to reflect the scale of trust earned by a protocol over its operational history
Measures Total Value Locked (TVL) sustained over long periods of time
Uses a logarithmic scaling to account fairly for massive differences in TVL between the largest protocols vs. upstarts
2. Pool Diagnostics (20%)
Aims to account for liquidity profiles for each individual pool within a protocol
Example: Aave v3 USDT on mainnet ($5B TVL) will have different liquidity characteristics from Aave v3 pyUSD on mainnet ($12M TVL), given it has ~400x larger TVL
Similar to the Protocol Integrity component, this metric is a factor of how TVL persists over time and is represented using logarithmic scaling
3. Community Adoption (15%)
Aims to measure holder distribution and diversity
More holders indicate broader, more distributed trust
Future improvements will include:
Analyzing holder concentration and ability for large owners to rug liquidity
Filtering out low-value addresses
Distinguishing between individual and protocol holdings
4. Underlying Asset Reliability (12.5%)
We leverage asset ratings from Credora
Aim to evaluate the stability and creditworthiness of stablecoins, derivatives, and pegged assets
5. Underlying Blockchain Security (12.5%)
We use L2Beat's Stages framework to assess security of Ethereum L2s
Assesses the underlying blockchain's maturity and security
For alt-Layer 1s Polygon and Gnosis, we arbitrarily rank them the same as Stage 0 L2s.
Known Limitations
We are not making nuanced risk assessments related to protocol governance or smart contract reviews
We may be missing token ratings for assets not currently covered by Credora asset ratings
We may be missing network ratings for L1s and/or L2s not rated by L2Beat
For a longer form explanation, read our blog post.
Last updated