Risk Scoring Guide

EarnForge computes a composite 0-10 risk score for every vault. Higher score means safer. The score is deterministic, purely data-driven, and based on 5 dimensions with fixed weights.

Score Labels

Score Range	Label	Color
>= 7.0	low risk	Green
4.0 - 6.9	medium risk	Yellow
< 4.0	high risk	Red

The 5 Dimensions

1. TVL Magnitude (25% weight)

Measures how much capital is locked in the vault. Higher TVL generally indicates more trust and lower risk of rug pulls or liquidity crises.

TVL (USD)	Score
>= $100M	10
>= $50M	9
>= $10M	8
>= $5M	7
>= $1M	5
>= $100K	3
< $100K	1

2. APY Stability (20% weight)

Measures how much the current APY diverges from the 30-day (or 1-day) historical APY. Large divergence suggests volatile or unsustainable yield.

Divergence	Score
< 5%	10
< 10%	8
< 20%	6
< 50%	4
>= 50%	2

The divergence formula is:

divergence = |apy.total - ref| / max(apy.total, ref)

Where ref is apy30d (preferred) or apy1d (fallback). If both are null, the score defaults to 5 (moderate).

3. Protocol Maturity (25% weight)

Known protocols receive a fixed tier score based on their track record, audit history, and TVL across the DeFi ecosystem.

Protocol	Score
aave-v3	9
morpho-v1	9
euler-v2	7
pendle	7
maple	6
ethena-usde	7
ether.fi-liquid	7
ether.fi-stake	7
upshift	5
neverland	4
yo-protocol	4
Unknown	3

Unknown protocols default to 3 (high risk) since there is no track record to evaluate.

4. Redeemability (15% weight)

Whether the vault supports withdrawals. Non-redeemable vaults carry additional liquidity risk since you may not be able to exit your position.

Redeemable	Score
Yes (`isRedeemable: true`)	10
No (`isRedeemable: false`)	3

5. Asset Type (15% weight)

Whether the vault holds stablecoins. Stablecoin vaults carry less price risk.

Asset Type	Score
Has `stablecoin` tag	9
No `stablecoin` tag	5

Weighted Formula

The final score is a weighted average:

score = (tvl * 0.25) + (apyStability * 0.20) + (protocol * 0.25)
      + (redeemability * 0.15) + (assetType * 0.15)

Weight rationale:

Dimension	Weight	Rationale
TVL Magnitude	25%	Strong signal of trust and liquidity
Protocol Maturity	25%	Audit history and track record are the strongest safety indicators
APY Stability	20%	Volatile APY suggests high risk or unsustainable incentives
Redeemability	15%	Ability to exit is important but secondary
Asset Type	15%	Price risk matters but is user-preference dependent

Example Calculation

Consider an Aave V3 USDC vault on Base with:

TVL: $120M
APY: 5.23% (30d avg: 5.10%)
Protocol: aave-v3
Redeemable: true
Tags: ['stablecoin']

Dimension	Raw Score	Weight	Weighted
TVL ($120M >= $100M)	10	0.25	2.50
APY Stability (divergence = 2.5%)	10	0.20	2.00
Protocol (aave-v3)	9	0.25	2.25
Redeemability (true)	10	0.15	1.50
Asset Type (stablecoin)	9	0.15	1.35
Total			9.6

Label: low risk (green)

Usage

SDK

import { createEarnForge } from '@earnforge/sdk';

const forge = createEarnForge();
const vault = await forge.vaults.get('8453-0xbeef...');
const risk = forge.riskScore(vault);

console.log(risk.score);      // 9.6
console.log(risk.label);      // "low"
console.log(risk.breakdown);  // { tvl: 10, apyStability: 10, protocol: 9, redeemability: 10, assetType: 9 }

CLI

earnforge risk 8453-0xbeef...

React

import { useRiskScore } from '@earnforge/react';

function RiskDisplay({ vault }) {
  const { data: risk } = useRiskScore(vault);
  // risk.score, risk.label, risk.breakdown
}

MCP

Prompt: “What’s the risk score for vault 8453-0xbeef…?”

The get-vault-risk MCP tool returns the full breakdown.

Filtering by Risk

Use the risk-adjusted strategy preset to filter for low-risk vaults only:

const top = await forge.vaults.top({
  asset: 'USDC',
  strategy: 'risk-adjusted',  // Only vaults with risk score >= 7
});

Or use the suggest() engine, which inherently weights allocations by risk score:

const allocation = await forge.suggest({
  amount: 10_000,
  asset: 'USDC',
});
// Higher-scoring (safer) vaults get larger allocations