Cryptocurrency with Confidence: Your Best Choice for a Cryptocurrency Risk Scorecard

Investing in cryptocurrency, like investing in any asset, involves some degree of risk. From inexperienced teams to bugs in smart contracts, many problems can arise in cryptocurrency projects in the way of lower prices.

That’s why we’ve developed industry-leading products. Blockchain Risk Scorecard.

While our original Blockchain Investor Scorecard measures rewards, our Blockchain Risk Scorecard measures risk so you can invest in cryptocurrency with confidence.

In this guide, we have presented an analysis of the Blockchain Risk Scorecard over the past year and a half. Cryptocurrency investments that our analysts believe are the lowest risk.

How Blockchain Risk Scorecard Works

Our scorecard rates cryptocurrency investments on a scale of 1 to 5, with lower scores indicating lower risk profiles. (Very important: lower = better.)

Our Blockchain Risk Scorecard categorizes cryptocurrency risks into six categories:

• team risk: We delve into the founding team behind it and their success history. How likely are they to trick you?
• financial risk: We look at how well capitalized and diversified the project is and whether it promises consistently increasing returns. What are the chances of running out of money?
• regulatory risk: We evaluate the likelihood of being sued by the SEC or other competent authorities. What are the chances of it being shut down or delayed by the government??
• Smart Contract Risk: Checks the underlying code and whether the project has undergone a technical audit. What are the chances of getting hacked or taken offline??
• towing hazard: Look at the number of users and partners. What are the chances that you simply won’t attract enough customers??
• behavioral risks: I would like to give my opinion on my personal investment motivation. How many people invest simply out of greed?

Each section is then averaged to give a total risk score. In other words, We are looking for cryptocurrency investments that are stable, sound, well-funded and managed by a trustworthy team..

Remember: all cryptocurrency investments, like all investments, involve some degree of risk. Our strategy is to find quality investments with the lowest risk and hold them for the long term..

Blockchain Risk Scorecard: Your Best Choice

rope

Tether is transparent about its team, with a recent report showing it has more than $86 million in funds. The company is also headquartered in Hong Kong, which has been improving regulatory clarity over the past few years (slightly higher than its US-based rival stablecoin USDC). We also rate Tether highly because the behavioral risk for the coin is shallow, as most people investing in Tether seek the stability and predictability of stablecoins.

• Team Risk: 2.2
• Financial Risk: 1.60
• Regulatory Risk: 2.80
• Smart contract risk: 1.33
• Towing risk: 1.5
• Behavioral Risk: 1.00
• overall score: 1.7

Ethereum

As a leading smart contract platform, the Ethereum team has developed a culture of transparency with its users, and its level of integrity is considered the industry standard. Moreover, Ethereum has over $390 million in liquidity at the time of this writing and has an average daily user count of 422,200. We’ve also seen this project get a good rating because it is by far the dominant Layer-1 blockchain and hundreds of platform smart contracts have been audited by top companies.

• Team Risk: 1.4
• Financial Risk: 2.1
• Regulatory Risk: 3.0
• Smart contract risk: 1.0
• Towing Risk: 1.0
• Behavioral Risk: 2.0
• overall score: 1.7

stack

Stacks is an open-source blockchain built on top of Bitcoin that has remained very transparent about its team and has avoided major controversies since its inception. Although some Bitcoin hard-liners are not happy about using BTC as a smart contract platform, Stacks has undergone several security audits conducted by well-known companies. We’ve given Stacks a good reputation thanks to its solid support and long development.

• Team Risk: 1.80
• Financial Risk: 2.20
• Regulatory Risk: 2.20
• Smart contract risk: 1.67
• Tow Risk: 1.70
• Action Risk: 1.50
• overall score: 1.80

USDC

USDC is a stablecoin pegged to the US dollar asset. It has over $26 million in reserves and its issuer, Circle, is transparent about its team. Circle is based in the United States, and there is still some ambiguity about the stablecoin regulatory framework. Despite the uncertainty, Circle has built a stable financial infrastructure underpinning USDC. We were able to quickly get through the 2023 banking crisis. Circle also uses an active bug bounty program where users can report issues in exchange for rewards.

• Team Risk: 1.80
• Financial Risk: 1.80
• Regulatory Risk: 3.70
• Smart Contract Risk: 2.30
• Towing Risk: 1.0
• Behavioral Risk: 1.0
• overall score: 1.9

Die (tie)

Dai is a decentralized stablecoin pegged to the US dollar. There are over 5 billion Dai in circulation, backed by collateral worth over $12 billion, making Dai overcollateralized compared to other stablecoins. While Dai is generally uncontroversial, some questions have been raised about the project’s decentralization. However, Dai gets solid marks because it has low behavioral risk, is the largest decentralized stablecoin project, and has held up well in crashes and bear markets.

• Team Risk: 2.20
• Financial Risk: 2.50
• Regulatory Risk: 2.50
• Smart contract risk: 1.67
• Tow Risk: 1.80
• Behavioral Risk: 1.00
• overall score: 2.0

Abe (tie)

Aave is a DeFi platform that is transparent about its team and has maintained a controversy-free history. Aave’s tokens account for 74% of its assets based on our valuation, which poses some risk. This is because too much concentration in a single asset can pose risks if its price crashes. Aave is also headquartered in the UK, where the cryptocurrency regulatory environment is still evolving compared to other jurisdictions. However, Aave gets a solid score as it is a pioneer in the DeFi space and one of the most successful lending platforms.

• Team Risk: 1.60
• Financial Risk: 2.00
• Regulatory Risk: 4.00
• Smart Contract Risk: 1.30
• Towing risk: 1.30
• Behavioral Risk: 2.00
• overall score: 2.00

Cardano

Cardano is an open-source smart contract platform that has demonstrated integrity since its inception. Cardano has a much slower release rate than other L1s, but claims this allows for more testing, improving stability and reliability. However, it lags behind Ethereum and its holdings are not as prominent or well-diversified. Overall, Cardano gets solid marks because it has long-term traction, a strong community of true believers, and a robust bug bounty program.

• Team Risk: 1.5
• Financial Risk: 2.6
• Regulatory Risk: 2.17
• Smart contract risk: 2.17
• Towing risk: 1.67
• Behavioral Risk: 2.0
• overall score: 2.02

Blockchain Risk Scorecard: The Worst Choice

The blockchain projects above are worth looking into for potential investors, but you may want to avoid projects that rate highly on the risk scorecard (remember: high = bad). The three most highly rated investments to date are:

• shiba inu Because the team is completely anonymous, the stakes are high, and it has been in the spotlight several times for controversy, including clashes between team members and project leaders who accused them of planning a hostile takeover.
• Dogecoin It is risky as it has not yet released a financial report, and many seasoned investors have warned against investing in meme coins like Dogecoin.
• Lastly, it is best to avoid it. ripple That’s because the SEC filed a lawsuit alleging that the network provided unregistered security services. Additionally, since this is a privately owned blockchain, it could lead to others having knowledge that you do not know.

Investor Implications

Our Blockchain Risk Scorecard is a great tool to help you make the best long-term investment decisions. You can download and create your own, or become a premium member and discover all the best cryptocurrency tokens in our risk scorecard library.