DeFi score rating 2.0
The teams have joined forces to create a comprehensive, 360-degree view of the smart contract threat landscape which involves crowdsourcing risk assessment & plans for a DAO.
Today, ConsenSys Codefi, and Armor announced they are updating Codefi’s DeFi Score rating in an effort to invite the community to help build the future of DeFi safety. The move is the first step in a larger initiative to create a collaborative DeFi Defense DAO to increase safety and transparency for DeFi through a community-driven product risk history and scoring resource.
“As crypto and DeFi go increasingly mainstream, we are proud to be building an imperative safety standard with Armor to give users everywhere better risk assessment tools to make smarter decisions with their tokens.” said Corbin Page, Head of Product at ConsenSys’ Codefi.
DeFi is risky
DeFi is currently a risky landscape: protocols range from fly-by-night scam operations to serious ones without much distinction, hacks have been a regular occurrence, users have lost funds, and objective information about DeFi protocols is hard to uncover across platforms. An improved risk framework and more easily accessible, objective protocol information will help investors everywhere more easily navigate safer investments.
“Formalizing DeFi risk assessment and making risk factors transparent is a major step forward for DeFi users. DeFi today is a wild west where the users pay the price in hacks and scams; quantifying the value of good security practices will encourage projects to reflect on whether they’re doing all they can to protect their users.” said Mitchell Amador, CEO at Immunefi.
Protocols and smart contracts containing large amounts of valuable assets are routinely targeted and face the following risks:
- Smart contract risks around technical bugs that can expose funds to hackers
- Centralization risks where admin keys or oracles may be misused for exploits
- Financial risks of under-collateralization causing insolvency, or low liquidity locking funds
Said Jack Clancy, Engineer at ConsenSys, “Not only will these risk assessment tools help the average crypto participant make more intelligent decisions, but it also incentivizes individual projects to boost their overall security and trustworthiness.”
DeFi score DAO
To further involve the community, the teams plan to form a DAO and draft a set of Gitcoin Bounties for community feedback to build on the risk score with goals for improvements like:
- Aggregating data points for each risk factor from existing reputable and reliable sources (automatically or crowdsourced)
- Validating or invalidating the source of the data
- Automating or implementing a trigger-based process from validating and updating data
- Adding/removing/hiding risk factor data points
- Adding additional data sources and data categories
- Generating an overall 0–10 score based on parameters set for each protocol
- Displaying risk factor data and a score for each protocol into a simple, easy to understand user interface
This initiative will also use the new Coordinape tool built by the Yearn team which enables the decentralized and transparent distribution of rewards autonomously allocated by the community of contributors doing the work. This will provide insights on what the community finds most valuable, and who the key contributors are in different areas. The aim is to make the experience of contributors more dynamic, rewarding, fair and transparent.
“Helping harness community involvement in creating a better DeFi risk score assessment is something we’re honoured to help steward in our focus on building an ecosystem of interoperable protocols and products to secure mass adoption of DeFi. Offering investors a risk scoring tool they can trust will empower new users to become a part of decentralized finance.” said Armor Co-Founder Azeem Ahmed.
ConsenSys is the leading Ethereum software company. We enable developers, enterprises, and people worldwide to build next-generation applications, launch modern financial infrastructure, and access the decentralized web. Our product suite, composed of Infura, Quorum, Truffle, Codefi, MetaMask, and Diligence, serves millions of users, supports billions of blockchain-based queries for our clients, and has handled billions of dollars in digital assets. Ethereum is the largest programmable blockchain in the world, leading in business adoption, developer community, and DeFi activity. On this trusted, open source foundation, we are building the digital economy of tomorrow.
ConsenSys Codefi is the blockchain application suite powering next-generation commerce and finance. We work with financial institutions, global enterprises, and Ethereum projects to digitize assets and financial instruments, launch decentralized networks, optimize business processes, and deploy production-ready blockchain solutions.