At Valid Network we see the cryptocurrency industry as an ever changing one. As such, its risks are growing and changing constantly as well. Therefore, as we see our core objective, the ability to identify risks in this market and expose them as early as possible, we believe that we should evolve our risks frameworks to support new asset types as they emerge. We are experiencing great demand to support liquidity pools, vaults and needless to say, NFTs. With that in mind we embarked on a journey to adapt our Valid Score solution with all its proven capabilities in the tokens space into a multi-asset-architecture, adding support to all the different entities starting with DeFi vaults.
How is the new Valid Score built?
An adaptation of the Valid Score, which was originally designed for tokens, is a challenging task as some of the items we keep track of for tokens such as its market cap and its evolution over time are no longer relevant, therefore we would have to evolve our perspective and replace that factor with a different one, Total Value Locked (TVL). Furthermore, there are other innovative factors on DeFi vaults that are not available in other asset types such as owners Time-locks or the concept of APY/APR and how these can be correlated to security events.
Beyond these basic risk factors, the structure of vaults is different. Our thorough risk analysis tool perceives the level of risk associated with any on-chain piece existing in the crypto ecosystem and therefore when looking at vaults, beyond the vault itself we also evaluate its dependencies including the chain and specific tokens in it, the farm it operates in, its controller and its strategy.
Using this model, we inspected each one of these components and its millions of on-chain data points , researching new types of vulnerabilities and classifying risks with advance machine-learning algorithms, analyzing past events to identify suspicious behaviors and patterns that could inform us about malicious activities. This means that each one of these infrastructure components received its own independent risk score broken down into a Valid score and its 4 underlying categories we use for risk categorization (Learn more). Once we had these, we ran an analysis of the dependencies among these components using trained neural networks to define the weight each layer should receive as we comprise the total Score and total categories for the new asset type.
This aggregated score is updated in real-time and is what we then display on our platform and share with our partners as a widget that will be displayed on their platforms and/or share the data with them through our APIs.
This is how you benefit most with the Valid Score
Our goal at Valid Network is to develop a next generation intelligence hub that provides insights to augment the journey investors, financials analysts and security teams are taking in the Crypto, Defi and Web3 industry in general. We provide the right data at the right time so they can make more educated decisions about their investments or other decisions within this exciting industry. That is why we took the valid score and packaged it into a Valid Score widget, so it will be accessible through every financial service provider, wallet, exchange, Dex and any other tool out there. By adding the Valid Score widget, providers allow their users to get a new innovative look into crypto assets, one that is focusing on both the security risk and financial risk aspects of the asset as we learn that financial data is just not enough. For example, some of our partners are using our valid score information as a required part in their governance proposals for new assets’ due diligence [Bancor]. Others are using the valid score to provide this score to their users as they explore new investments opportunities [Revault].
To integrate the Valid Score widget click here.
In our next blog we’ll share about how augmenting investment strategies with the Valid Score is the right thing to do! (Register to our newsletter)
Valid Data’s real-time and predictive insights are used by Cryptocurrency traders and exchanges, as well as investors and hedge funds, to make better investment and trading decisions, to protect the value of their digital assets, and to capitalize on market opportunities that only Valid Network’s technology can uncover.
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