# 2️⃣Market risk measure (MRM)

A high volatility of the underlying assets leads to high impermanent loss due to arbitrage opportunities. Thus, the rating methodology leverages on the **VaR equivalent Volatility** (VeV) in order to define the market risk measure. This metric is a volatility-like measure associated to a value at risk (VaR) and is widely used in traditional finance. In a nutshell, it corresponds to the degree of variation of the underlying assets in a stressed scenario.

Moreover, the VeV is assigned to a market risk category ranging from a scale of 1 (low risk) to 7 (high risk):

*Table 1: Market risk measure (MRM).*

And, each MRM corresponds to a grade as follows:

*Table 2: Rating scale.*

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