DefiLlama and Forgd jointly launch 128 crypto token ratings

Two entities from the crypto ecosystem-DefiLlama and Web3 investment bank Forgd-jointly launched Universal Token Ratings, which recently developed a ranking system that aims to evaluate 128 tokens based on market operations and transparency. Uniswap is the only project to receive an AAA rating, with the remaining 25 cryptocurrencies receiving an AA rating. The system follows the terminology of traditional rating agencies, but does not measure default risk. It mainly interprets liquidity, transaction volume, token unlocking and the quality of information released by each project.

In short,

Universal Token Ratings cover 128 tokens, with ratings ranging from AAA to CCC.
Uniswap ranked first with a score of 60.8 out of 100.
This rating combines transparency scores and market performance scores.
Rankings neither assess the rising potential of tokens nor the risk of default.

Uniswap has exclusive AAA rating in the rankings

As the crypto market recovers, DefiLlama and Forgd announced the launch of Universal Token Ratings (UTR for short) on August 26. The dashboard assigns a percentile numerical score to each token, which then corresponds to a rating from AAA to CCC.

was launched, a total of 128 tokens were evaluated. Uniswap topped the list with an AAA rating and a score of 60.8. In addition, the project's public information score is 7.87 (out of 10) and the market performance score is 7.72.

The Meteora protocol ranked second with a total score of 59.87, slightly below the AAA level. The top ten also include Curve DAO, Raydium, o1 exchange, ether.fi, Jito, Dogecoin, Zama and Pyth Network, all receiving AA ratings.

Cryptocurrencies that receive AA ratings also include Solana, Zcash, Aave, Optimism, Avalanche, zkSync, Arbitrum, etc. Tokens such as Worldcoin, Pendle, Ondo, Polygon, NEAR and Hyperliquid are classified as Class A. Based on the rankings, Impressive, Filecoin and Celestia received BB ratings, while Sui received a BBB rating.

Dogecoin, Solana and Zcash also appear in this ranking, indicating that their scope is not limited to DeFi protocol tokens. The dashboard also covers multiple areas such as blockchain infrastructure, memes, decentralized trading platforms, pledges, real-world assets, and artificial intelligence.

Ratings will be updated as the data changes. The results submitted by DefiLlama and Forgd are dynamic because the two entities do not want a final conclusion. According to its official introduction, once the liquidity of the agreement deteriorates, the price spread widens, or the token unlocking does not match the announced schedule, the agreement may be deducted.

Ratings are obtained by multiplying transparency and market performance

Universal Token Ratings builds rankings through two dimensions, each scored on a 10-point scale. The first dimension is called the "disclosure axis" and is used to measure the quality, integrity and update of the information released by the project.

This section specifically examines the identity of the main participants, team organization, legal structure, cash flow statement, and financial flow direction. Also consider token release schedules, token allocation, multiple signatures, audits, relationships with exchanges or market makers, etc.

The second dimension is called the "performance axis" and is used to verify actual market operations. In addition, it analyzes trading volume, depth of liquidity, bid-ask spreads, number of trading platforms available and compliance with derivatives conditions.

Numerous other data cover the ratio of valuation to fully diluted market value, token unlocks, token repurchases, and the fulfillment of various commitments made by market managers. Forgd emphasized that its infrastructure monitors more than 500 agreements and 35 liquidity providers. The final rating is not an average, but is obtained by multiplying two dimensions.

Taking Uniswap's rating determination as an example, we can verify this formula: multiply its transparency score of 7.87 by its performance score of 7.72 to get 60.76 points. The result is approximately 60.8 points after rounding (out of 100 points).

This calculation method requires a balance between the two dimensions. If an agreement scores 9 points in performance but only 3 points in transparency, the final score is only 27 points. As a result, missing information on teams, vaults or allocation schedules cannot be compensated for by adequate liquidity.

Vice versa: If a project publishes detailed information in the first dimension, it will receive a score of 9, but if its market only gets a score of 3 due to insufficient depth or too high a price difference, the final rating will also be limited to 27 points.

Controllable on-chain events are included instantly, without the need for protocol to resubmit files. Unexpected token unlocking or new online transactions can change the outcome. However, many other market parameters still rely on averages over the past 30 days. Therefore, progressive updates do not mean that every change in price or trading volume will directly trigger a new rating.

AAA ratings measure neither earnings nor default risk

DefiLlama and Forgd compare their system to the evaluation systems used by rating agencies such as Moody's, Fitch and Standard & Poor's for decades. The choice of letters strengthens this visual similarity, but the meaning of the rating is completely different.

In the traditional financial sector, AAA ratings represent an extremely high ability to fulfill financial commitments. As defined in the definition of Standard & Poor's Global Ratings, rating agencies assess the issuer's solvency or the default risk of a bond. Tokens are not necessarily debts and do not necessarily guarantee repayment. Therefore, Uniswap's AAA rating does not mean that UNI has the same risk profile as AAA bonds, but only that the cryptocurrency achieves the same results based on the specific criteria of the UTR.

Similarly, this score does not assess the complete security of the protocol. Auditing is one of the pieces of information that is reviewed, but it does not guarantee that smart contracts are free of loopholes. All regulatory risks, governance, actual concentration of power, or the ability of the agreement to gradually generate revenue are not covered by this ranking.

The final rating is neither a price target nor a buying recommendation. A high-ranking cryptocurrency may fall in value when the market adjusts or initial capitalization becomes too high. Conversely, a lower-rated token, despite limited transparency, may still rise due to speculation.

The value of this new rating may lie in its ability to detect signs of deterioration before prices emerge. Changes in ratings, the arguments provided for changes, and the expansion of the number of tokens will help determine whether UTR will become an excellent indicator of market risk or remain mainly at the level of a comparison tool.