Methodology

{
  "object": "methodology",
  "version": "3.0",
  "rules": [
    {
      "code": "tvl_floor",
      "description": "Total value locked below $50M.",
      "threshold": 50000000
    },
    {
      "code": "apy_floor",
      "description": "Total APY below 1%.",
      "threshold": 1
    },
    {
      "code": "apy_ceiling",
      "description": "Total APY above 30%: treated as an outlier, not an opportunity.",
      "threshold": 30
    },
    {
      "code": "out_of_scope",
      "description": "Not a stablecoin-only or single-asset Bitcoin, Ether or XRP instrument (pairs and other assets are out of scope).",
      "threshold": "stablecoin-only or single-asset BTC / ETH / XRP"
    },
    {
      "code": "impermanent_loss",
      "description": "The position is exposed to impermanent loss."
    },
    {
      "code": "recent_incident",
      "description": "A security incident on the protocol in the last 90 days, or one of at least $10M in the last 365 days.",
      "threshold": "90 days; $10M within 365 days"
    },
    {
      "code": "exit_blocked",
      "description": "A simulated withdrawal is blocked, drained or unavailable."
    },
    {
      "code": "unaudited_small",
      "description": "No audit on record and total value locked below $100M.",
      "threshold": 100000000
    },
    {
      "code": "unverified_yield",
      "description": "Realized yield (measured by simulated deposits and withdrawals, high or medium confidence) below 50% of the advertised native yield.",
      "threshold": 0.5
    },
    {
      "code": "score_floor",
      "description": "Safety score below 50.",
      "threshold": 50
    }
  ],
  "signals": [
    {
      "code": "no_audit_on_record",
      "description": "No audit on record for the protocol.",
      "impact": -20
    },
    {
      "code": "unknown_protocol",
      "description": "The protocol is not in our protocol registry.",
      "impact": -10
    },
    {
      "code": "prior_incident",
      "description": "A past security incident on the protocol.",
      "impact": "-25 within 365 days, -15 when older"
    },
    {
      "code": "young_protocol",
      "description": "The protocol is younger than 365 days.",
      "impact": -15
    },
    {
      "code": "young_instrument",
      "description": "Less than 30 days of yield history.",
      "impact": -10
    },
    {
      "code": "exit_queue",
      "description": "Withdrawals go through a queue.",
      "impact": -10
    },
    {
      "code": "partial_exit",
      "description": "Only part of a position can be withdrawn at once.",
      "impact": -15
    },
    {
      "code": "exit_unverified",
      "description": "The withdrawal path could not be verified by simulation.",
      "impact": -5
    },
    {
      "code": "realized_below_advertised",
      "description": "Realized yield below 80% of the advertised native yield.",
      "impact": -10
    },
    {
      "code": "incentive_dependent",
      "description": "More than half of the yield is paid in incentive tokens.",
      "impact": -10
    },
    {
      "code": "volatile_yield",
      "description": "Unsteady yield over 30 days (consistency below 0.7).",
      "impact": "-20 below 0.5, -10 below 0.7"
    },
    {
      "code": "concentrated_depositors",
      "description": "The ten largest depositors hold more than 80% of deposits.",
      "impact": "-10 above 90%, -5 above 80%"
    },
    {
      "code": "small_tvl",
      "description": "Total value locked below $100M.",
      "impact": -5
    },
    {
      "code": "elevated_apy",
      "description": "Total APY above 15%.",
      "impact": -10
    }
  ],
  "bands": [
    {
      "band": "low",
      "min_score": 80,
      "max_score": 100
    },
    {
      "band": "moderate",
      "min_score": 60,
      "max_score": 79
    },
    {
      "band": "high",
      "min_score": 0,
      "max_score": 59
    }
  ],
  "ranking": "Every instrument starts at 100 points and each signal deducts its impact. Instruments that fail a rule are excluded. Within each asset class, the instruments that pass are ranked by risk band (low, then moderate, then high) and then by total APY, highest first; the top 5 per class form the daily report. The front-runners' history is checked before publishing: an instrument with less than 30 days of history loses 10 points (young_instrument) and drops out if it falls below 50.",
  "schedule": {
    "cadence": "daily",
    "local_time": "07:30",
    "time_zone": "America/New_York"
  }
}