Examples
In order to illustrate the rating methodology, we consider three liquidity pools from Uniswap V2: • USDC-WETH; • DAI-USDC; • WBTC-WETH. The following results are obtain from the USDC-WETH pool:
66.2
6
0.04
1
Table 4: USDC-WETH liquidity pool.
The MRM of the USDC-WETH pool is 6 (Highly speculative) as it is well known that crypto-assets are highly volatile which is reflected in the VeV. However, since it is one of the largest pool in terms of liquidity of Uniswap V2, the LRM is 1 as expected.
1.8
1
0.09
1
Table 5: DAI-USDC liquidity pool.
On the other hand, the MRM of the DAI-USDC pool is 1 (Prime quality) because stable-coins are less volatile than crypto-assets.
32.29
5
0.21
2
Table 6: WBTC-WETH liquidity pool.
Finally, the MRM of the WBTC-WETH pool is 5 (Speculative). The resulted MRM is better than the USDC-WETH pool thanks to the positive correlation between the WBTC and the WETH which reduces volatility and therefore risk.
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