#DeFiGetsGraded

DeFi (“decentralized finance”) projects and protocols are increasingly subject to formal grading systems, which evaluate their security, risk, transparency, and operational quality using structured, quantitative, and sometimes crowdsourced frameworks. These DeFi “grades” help users, investors, and institutions compare protocols and manage risk more effectively.

How DeFi Gets Graded

1. Risk and Security Scores

Operational and Security Risk Frameworks: Institutions like Galaxy use frameworks (e.g., “SeC FiT PrO”) that break down DeFi protocol risk into several weighted domains—Security, Compliance, Finance, Technology, Protocol design, and Operations. Each domain is scored, and protocols receive an aggregate percentage indicating their relative risk level.

Smart Contract Security: Many systems heavily weight whether the code is audited, how long it’s been on the mainnet, and whether any vulnerabilities have been exploited. Regular, reputable audits and bug bounties boost scores