Exchange Rating Methodology

Introduction

TokenInsight Exchange Rating applies a standardized methodology to evaluate crypto-asset exchanges. The methodology is designed to deliver a comprehensive overview and evaluation of exchange—based on evidence-driven research and data analysis. It is not designed to assess the investment value of any token or asset, and the rating output should not be used as the sole reference for investment decision-making. Building on TokenInsight’s rating practice since 2018, our exchange rating framework is continuously refined to reflect industry evolution, regulatory developments, and the changing risk landscape. As exchanges expand across jurisdictions, product lines, and user segments, TokenInsight Exchange Rating is intended to provide market participants with a consistent lens for comparing exchanges and understanding key strengths, limitations, and risks.The current version of TokenInsight’s Exchange Rating methodology is organized into seven core dimensions, each reflecting a critical capability set required for a resilient and trustworthy exchange:

• Compliance

• Security

• Market Efficiency

• Operations

• Ecosystem

• Product

• Team

These dimensions are assessed through a structured set of indicators and supporting evidence. Depending on data availability and the exchange’s business scope (e.g., spot-only platforms, derivatives-heavy platforms, DEX), TokenInsight applies consistent standards while accounting for business context.

Main Features of Exchange Rating Methodology

Combination of quantitative and qualitative assessment

TokenInsight Exchange Rating integrates both quantitative and qualitative evaluation to reflect the realities of exchange risk and performance.

• Quantitative indicators capture measurable market and operational signals such as liquidity conditions, observable trading activity levels, and certain product/infrastructure performance characteristics.

• Qualitative indicators capture factors that cannot be fully measured by numeric data alone, such as regulatory posture clarity, governance maturity, incident-response transparency, and institutional credibility. These require structured analyst review, peer comparison, and evidence triangulation.

This approach avoids over-reliance on a single data type and helps ensure that ratings reflect comprehensive performance of exchange.

Data-driven indicators paired with research-based verification

Exchanges often publish claims related to licensing, security controls, proof-of-reserves, insurance funds, or institutional partnerships. TokenInsight emphasizes verifiability:

• Wherever possible, assessments are grounded in objective data (market data, observable exchange behavior, and measurable operational indicators).

• Claims are validated through research-based verification, including cross-checking disclosures against third-party attestations, publicly available records, and consistent behavioral evidence over time.

When key claims cannot be verified, TokenInsight highlights the disclosure gap as part of the risk narrative rather than assuming best-case conditions.

Market-structure lens: evaluating exchanges as trading venues

Unlike many project ratings, exchange ratings must treat the exchange as both a service provider and a market mechanism. TokenInsight incorporates a market-structure perspective, emphasizing:

• The exchange’s ability to support fair price discovery

• Execution quality under normal conditions

• Stress behavior during extreme volatility, including continuity, stability, and orderliness

This perspective ensures the methodology captures “how the venue behaves” when it matters most.

Modular framework adaptable to exchange business models

Exchanges vary significantly by jurisdiction, target users, and product composition ( e.g. spot, derivatives, copy trading, launchpad, wealth products, fiat rails, Web3 services). TokenInsight uses a consistent dimension framework while allowing the analysis to adapt to the exchange’s actual scope:

• Core expectations remain stable (e.g., security and compliance maturity).

• Product and ecosystem assessments reflect the exchange’s strategic focus and operational complexity.

• Derivatives-heavy venues are evaluated with heightened attention to market mechanisms and risk design.

This structure supports comparability without forcing different exchange models into an artificial one-size-fits-all evaluation.

Cross-sectional analysis combined with dynamic monitoring

Exchange conditions can change quickly due to market volatility, security incidents, or regulatory actions. TokenInsight therefore combines:

• Dynamic data: indicators that can be monitored frequently (e.g., market efficiency signals, certain activity or performance proxies).

• Cross-sectional research: indicators requiring analyst collection and periodic review (e.g., legal and regulatory positioning, incident histories, governance disclosures, ecosystem relationships).

To maintain timeliness, TokenInsight may distinguish between the time of the latest analyst review and the time of the most recent data refresh, where applicable. This helps users understand which parts of the assessment reflect long-term structural factors versus rapidly changing conditions.

Conservative bias in high-impact risk domains

Crypto exchanges represent high-impact infrastructure, where failures can cause user losses or systemic spillovers. TokenInsight applies a conservative evidentiary standard in the most critical domains—particularly security, custody, and compliance:

• Strong claims require strong evidence.

• Incomplete disclosure increases uncertainty and may be treated as a risk factor.

• Historical incident response and remediation quality are considered important signals of real-world resilience.

Rating Principles

TokenInsight Exchange Rating is guided by a set of principles intended to preserve analytical integrity, protect against bias, and improve comparability across exchanges.

Independence: TokenInsight maintains internal controls to support independent analysis. During the rating process, the research team and any review mechanisms operate with independence from the rated entities to reduce the risk of biased outcomes or external influence.

Objectivity: Ratings and narratives are grounded in objective evidence and structured evaluation procedures. Analysts aim to separate verified facts from interpretation and avoid conclusions that are not supported by observable data or credible documentation.

Fairness: TokenInsight applies consistent evaluation standards across exchanges while considering relevant context such as business scope, jurisdictional footprint, and product complexity. The methodology seeks to produce fair and unbiased assessments based on public information, verifiable data, and professional analysis.

Authenticity: TokenInsight guarantees that the data collection in the database and data adopted in rating procedures are reliable, the data sources are open, and can reflect the real performance of Exchange.

Consistency: To enable comparability, TokenInsight maintains consistency in indicator definitions, evaluation procedures, and analytical standards. When methodology evolves (e.g., to incorporate new industry standards or emerging risks), changes are managed carefully to preserve interpretability across time and across exchanges.

Rating Dimension

Compliance

Compliance is a foundational dimension because regulatory alignment and financial-crime controls directly shape an exchange’s ability to operate sustainably, access fiat and institutional channels, and manage jurisdictional and enforcement risks. In this dimension, we primarily assess an exchange’s legal and regulatory positioning and the maturity of its AML-related controls. This includes how clearly the exchange presents its regulatory status and operating entities. The indicators we reference include but are not limited to:

• Licenses

• Regulatory cooperation

• KYC

• KYT

Security

Security is central to exchange risk assessment because exchanges function as high-value targets and critical market infrastructure; failures in security controls can lead to irreversible user harm and systemic market impacts. In this dimension, we focus on both information system security (the protection of infrastructure and systems), asset security (custody architecture and user asset protection practices), and the exchange’s track record regarding negative events. Our analysis emphasizes whether security is implemented as an ongoing program with layered controls, rather than a one-time set of claims. The indicators we reference include but are not limited to:

• Server security

• Security certifications (e.g., ISO 27001, CCSS, SOC 2)

• Bug bounty programs

• Penetration testing

• Insurance fund / protection fund structures

• User account protection mechanisms

• Wallet management

• Proof of Reserves (PoR)

• Negative events/incident history

Market Efficiency

Market efficiency is included because an exchange’s core function is to provide a fair, continuous, and low-friction venue for price discovery and execution—especially under volatility. In this dimension, we mainly look at the exchange’s asset diversity (how it constructs and maintains market coverage), liquidity quality (execution conditions and resilience), and the derivatives trading mechanism (market design and robustness for leveraged products where offered). The goal is to evaluate whether trading conditions are consistently reliable and whether market structure supports orderly execution. The indicators we reference include but are not limited to:

• Asset coverage

• Order book depth

• Slippage

• Spread

• Specific derivatives trading mechanism

Operations

The Operations dimension evaluates whether the exchange can run reliably as high-availability financial infrastructure and maintain consistent engagement with users. In this dimension, we focus on the exchange’s social media operation as reflecting element of the exchange’s communication discipline and transparency in public channels, exchange overview as an indicator of operational maturity and continuity, user overview as a lens into the exchange’s user footprint and global presence, and Events, which assesses the vitality and sustainability of platform participation. We use these elements to understand whether the exchange can run reliably at scale and maintain trust through different market cycles. The indicators we reference include but are not limited to:

• Milestones & roadmap

• Length of operation

• Asset under management

• Volume (as disclosed and/or observable proxies)

• Global impact

Ecosystem

Ecosystem is included because exchanges do not operate in isolation; their competitiveness and risk profile are shaped by external relationships, integration depth, and ecosystem participation. In this dimension, we examine the exchange’s role in incubation activities, its institutional relationships, engagement with Layer-1 ecosystems, the presence and positioning of an exchange token (where applicable), market maker arrangements (where disclosure allows), and academy. This dimension helps capture how an exchange connects to liquidity networks, builders, institutions, and industry development. The indicators we reference include but are not limited to:

• Investment & fundraising (incubation-related)

• Industrial/Research Institutions/Government/Bank Relationships or network

• Layer-1 design and ecosystem

• Exchange token presence and positioning

• Market maker partnerships

• Tutorial/research content by Exchange Academy

Product

Product is selected because users ultimately experience an exchange through its product design, coverage, accessibility, and technical reliability. In this dimension, we focus on the exchange’s core exchange product offering, API capabilities (important for professional and institutional participation), and Web3 product lines (where applicable). We will assess product maturity while ensuring the product portfolio meets diverse user needs. The indicators we reference include but are not limited to:

• Trading product (order function etc)

• Asset management

• User experience

• API quality

• DEX products (if offered)

• Wallet products (if offered)

Team

Team is included because governance quality, execution capability, and long-term stability are ultimately driven by people, leadership structure, and strategic resources. In this dimension, we focus on team overview (including organizational capability to support global operations) and investor background as contextual signals of strategic support and governance expectations. This dimension helps elucidate an exchange's organizational structure and background, serving as a key factor in measuring its growth potential. The indicators we reference include but are not limited to:

• Team structure

• Investor background

Rating Symbols and Definitions

AA

Demonstrates exceptional overall strength with robust risk controls and strong infrastructure maturity. The exchange shows a highly credible posture across Compliance, Security and Ecosystem, maintains high market efficiency under both normal and stressed conditions, and operates with strong reliability and transparency. Products and services are generally comprehensive and stable, supported by a capable organizational Team. Multiple objective indicators and research findings confirm very high quality and minimal risk.

A

Shows strong overall capability with generally mature compliance and security practices and reliable trading venue performance. The exchange typically provides consistent market quality, stable operations, and a well-developed product offering, though certain areas may still have improvement room. Multiple objective indicators and analyst assessments indicate high quality with low risk.

BBB

Demonstrates solid baseline maturity and a generally reliable operating model. The exchange is typically functional and stable across major dimensions—particularly in core trading and operations—while ecosystems, governance, or product may be less developed compared with A-tier venues. Market quality and resilience during volatility are usually acceptable but may show limitations under stress. Overall risk is manageable, with identifiable areas requiring continued strengthening.

BB

Reflects moderate capability with noticeable gaps in product maturity, ecosystems, or operational robustness. The exchange can generally provide services, but may exhibit weaknesses in one or more key areas such as compliance clarity, security assurance, incident communication, or market-quality stability. Product breadth may exist, but supporting infrastructure and governance may not be equally mature. Objective indicators and research suggest elevated but still manageable risk.

B

Indicates basic operational viability but with material weaknesses that may impact reliability, user protection, or market integrity. The exchange may face constraints in compliance posture, security program maturity, or resilience under market stress. Market efficiency may be inconsistent, and disclosures may be limited or uneven. Overall, the exchange carries obvious risk, and sustained improvement is needed to reduce uncertainty.

CCC

Represents significant deficiencies across multiple dimensions, with uncertainty regarding long-term stability and risk management effectiveness. The exchange may show limited maturity in compliance and/or security practices, weaker operational resilience, and less reliable market conditions—especially during periods of high volatility. Disclosures may be insufficient for strong confidence. Objective indicators suggest high risk and a higher likelihood of adverse events or service disruption.

CC

Exhibits major weaknesses and inadequate control maturity, often accompanied by unclear disclosures or repeated negative signals. The exchange may show persistent vulnerabilities in security assurance, compliance credibility, operational stability, or market integrity. Confidence in the exchange’s ability to protect users and maintain orderly services is low. The overall risk level is very high.

C

Reflects severe weaknesses in fundamental capabilities and risk controls. The exchange may struggle to provide reliable services or to demonstrate credible user protection, security safeguards, and compliance posture. Transparency is often insufficient to support confidence, and operational/market risks are pronounced. The exchange is assessed as extremely high risk.

D

Multiple indicators suggest the exchange’s services are terminated, materially compromised, or cannot be properly and consistently provided. This rating indicates an highest level of risk, with severe concerns regarding operational continuity and user protection.