Token Rating
Introduction
TokenInsight Rating uses a standardized rating methodology to evaluate tokenized projects in the blockchain industry. The rating methodology we provide only assesses the qualification and risk of a given project. It cannot be used to assess the investment value of the token. The rating results cannot be utilized as the sole point of reference for investment purposes.
TokenInisght Rating started in 2018, initially, we wanted every user to be more aware of the prospects and risks of projects in the blockchain industry through our rating. After nearly 5 years of continuous exploration, as the industry evolves and develops, we are constantly updating and iterating our rating methodology to fit various types of projects.
The current version of the rating methodology covers six dimensions, each of which contains several different scoring indicators. Based on detailed research and analysis of a project, objective data is used to reflect the project's score on each indicator. All of the indicator scores will be then weighted and aggregated to a final score, and the final rating score is assigned a letter grade in the appropriate range.
Main Features of TokenInsight Rating Methodology
Combination of quantitative and qualitative analysis: Each dimension contains both quantitative and qualitative analysis indicators. Most of them are quantitative indicators, which can be scored by simply obtaining objective data. Some indicators cannot be analyzed quantitatively and require in-depth research and peer comparison by our experienced analysts to give the corresponding scores.
Fully-automated objective indicators: Built using our own data set, products, and data mining tools. By regularly obtaining objective data on a daily basis, fully automated and objective indicators can effectively reflect the development and changes. We also provide highly visualized historical score changes.
Reasonable and detailed model classification: In our rating methodology, we have created different models to fit different types of projects in the blockchain industry. Each model contains the same 6 dimensions and the score percentages for each dimension. For some projects that cannot be measured by common indicators, we cut their weight and add some special indicators for better evaluation. This allows our ratings to be closely linked to the state of the blockchain industry and can be applied to a wider range of blockchain projects.
Cross-sectional data combined with dynamic data: In addition to objective data that can be obtained automatically through data mining tools, there are some quantitative analysis indicators that require analysts to collect and process data manually. Therefore, in addition to the data that is automatically updated daily, time-section data is also used in the methodology. To ensure the timeliness and accuracy of the time section data, our team of analysts will review and update it regularly, usually once every quarter. You can find Review Time and Update Time on the rating page. They represent the time of the last manual analyst update and the time of the automatic data update, respectively.
Rating Principles
Independence: TokenInsight guarantees our complete internal control. During the rating process, the members of the rating team and the review committee maintain their independence and are isolated from the target projects to prevent biased research and influence from external factors.
Objectivity: The team members conduct ratings based on objective information and data of the target projects, and review the rating results in strict accordance with the procedures.
Fairness: During the rating process, members of the rating team adhere to the principle of fairness and produce fair and unbiased ratings based on publicly available information and professional knowledge and skills.
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 development progress of the project.
Consistency: TokenInsight guarantees a certain degree of comparability and consistency in the measurement of risks, and maintains consistency in the collected data, calculations, indicators, and rating standards.
Referenced Indicators
TokenInsight Rating focuses on evaluating the current status of development and the gap between it and the expected goals. Therefore the objective data used are from the current moment. The project's outlook on the future is only included in a small part of the evaluation results.
Specifically, we consider the current qualification and risk of a project in the following six dimensions.
Underlying Technology & Security
The security of the underlying technology is always fundamental to the success of a blockchain-based project. We mainly look at the security and stability of the project's underlying technology in this dimension. Projects that have improved their security and stability in various ways, or that have been tested over time without any vulnerabilities, are more likely to score higher in this dimension.
The indicators we reference include but are not limited to Operation Duration, GitHub Activity, Smart Contract Audits, Bug Bounty Programs, and Crisis Events. For public chain projects, we also consider their Network Components with respect to the Nakamoto Coefficients, etc.
Roadmap & Progress
Publicly disclosed long-term goals and specific development plans represent the project team's commitment to development. They also show the direction of the project and the development strengths of the core team and demonstrate accountability to its community supporters. Ongoing milestones and a continuously updated roadmap provide a reference for whether the team is delivering on its commitments.
The ideal project will have specific and achievable long-term goals, a roadmap that is as detailed as possible, and the ability to deliver key milestones on schedule as outlined in the roadmap.
The indicators we reference include but are not limited to Roadmap Evaluation, Progress Disclosure, Milestones Achieved, and Actual Progress vs. Expectations.
Token Economics
Our assessment of Token Economics is divided into two parts: advance planning and actual user usage. Advance planning for Token Economics includes application scenarios, distribution plans, and vesting plans for native tokens. These reflect the project's potential ability to attract target users and its goal for long-term development.
The specific holdings and usage of the token can be used to test the success of Token Economics planning. We generally consider Token Economics ideal for projects with more detailed design, clearer disclosure, relatively more on-chain holders, and more on-chain activities.
The indicators we reference include but are not limited to Native Token Usage Scenarios, Token Distribution Plans, Token Vesting Plans, On-Chain Holders, and On-Chain Activity. For Stablecoins, we also consider their Price Peg Methods, Reserve Assets and etc.
Token Performance
The assessment of the secondary market performance of the token is divided into two main parts: liquidity and historical price performance. We refer to the performance of BTC and ETH as the overall macro market comparison variables and study the performance of the project's native tokens in different market environments.
Ideally, the native token of a project should be liquid on mainstream exchanges and have a relatively high and stable trading volume. At the same time, their historical price volatility should be relatively lower.
The indicators we reference include but are not limited to: Supported Exchanges, Spot & Derivative Trading Pairs, Trading Volume, Turnover Rate, Price Volatility, Moving Average Return, and Retracement from ATH.
For Stablecoins, we also consider their Price Depeg Rate.
Ecosystem Development
Participants are the most important for any ecosystem, so we will focus on a comparative study of the number of community supporters and engagement, supplemented by a study of related project support, to determine the ecosystem's vitality and potential for growth. Typically, projects that have more engaged users and are more active in official communities and social media, or are supported by more eco-related projects, are more likely to score higher.
The indicators we reference include but are not limited to Eco-related Projects, Size & Activity of the Official Community, Size & Activity of Social Media, and Decentralized Governance.
Team, Partners & Investors
The qualifications of the core team can greatly influence the project's prospects. Publicly disclosed partners and investors can help us understand how much help the project will receive in certain areas. The ideal project should be led by an experienced core team with a strong educational background, a solid team size, and a balanced distribution of team members. It also has the support of partners with experience and strength in the relevant industry, as well as reputable investors.
The indicators we reference include but are not limited to Core Team Strength, Team Size and Stability, Partner Evaluation, and Investor Evaluation.
Rating & Outlook Definition
TokenInsight Rating Symbols and Definitions
AAA: Demonstrates exceptional underlying technology and robust security measures. The project has boasted a substantial and thriving ecosystem and garnered significant industry attention. Multiple automated metrics affirm the project's outstanding quality and minimal risk.
AA: Showcases strong foundational technology and a high level of security. The project has enjoyed a large and thriving ecosystem and attracted considerable industry attention. Multiple automated metrics confirm the project's healthy development trajectory with high quality and low risk.
A: Exhibits a secure and reliable technological infrastructure. The project has garnered notable industry attention and boasts a substantial, steady, and diverse ecosystem. Multiple automated metrics signify the project's healthy development with relatively low risk.
BBB: Demonstrates high technological feasibility and relatively rich application scenarios, with major products already launched and continuously iterated, contributing to a stable ecosystem. Multiple automated metrics reflect significant industry attention and support, steady development, and highly manageable risks.
BB: Features good technological feasibility and diverse application scenarios, with major products already launched and an early-stage ecosystem in place. Multiple automated metrics indicate a notable level of industry attention and support, stable development, and relatively high manageable risks.
B: Boasts a sound technological framework and hybrid application scenarios, and partial major products already launched. Multiple automated metrics indicate a certain level of industry attention and support, with manageable risks.
CCC: Possesses a reasonable technological framework, but is still under development or has early-stage products in use, albeit with limited application scenarios. Multiple automated metrics suggest moderate market attention, while long-term sustainable development carries uncertainties, resulting in a moderately elevated level of risk.
CC: Exhibits limited development progress, technological framework issues, restricted application scenarios, and inadequate or unclear disclosure. Multiple automated metrics indicate a lack of market attention/community support, with a relatively high level of risk.
C: Faces significant technological framework challenges, limited application scenarios, or long-term stagnation in development. Insufficient disclosure to demonstrate the proper and sustainable development of the project. Multiple automated metrics point to a lack of market attention, resulting in a high level of risk.
D: Multiple automated metrics indicate that the project's services are terminated, or the services cannot be properly provided, signifying an extremely high level of risk.
TokenInsight Rating Outlooks and Definitions
Positive Outlook: The project has a high probability of being upgraded in the next 3-6 months
Stable Outlook: The project has a high probability of maintaining the current rating in the next 3-6 months
Negative Outlook: The project has a high probability of being downgraded in the next 3-6 months
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