#DeFiGetsGraded DeFiGetsGraded DeFi (“decentralized finance”) projects and protocols are increasingly becoming the subject of formal rating systems that evaluate their security, risk, transparency, and operational quality using a structured, quantitative framework, and sometimes crowdsourced information. The 'value' of DeFi helps users, investors, and institutions compare protocols and manage risks more effectively.

How DeFi is Rated

1. Risk and Security Score

Operational and Security Risk Framework: Institutions like Galaxy use frameworks (e.g., 'SeC FiT PrO') that break down the risks of DeFi protocols into several weighted domains—Security, Compliance, Finance, Technology, Protocol Design, and Operations. Each domain is assessed, and the protocol receives an aggregate percentage indicating their relative risk level.

Smart Contract Security: Many systems heavily consider whether the code has been audited, how long it has been on the mainnet, and whether any vulnerabilities have been exploited. Regular and reliable audits and bug bounties enhance the score.