# Protocol risks

**Audit of contracts**

This is the main parameter to consider in a global project evaluation. The Stablecomp team evaluates the credibility of auditors and the vulnerability of smart contracts. Not all audits have the same quality and many audit processes have critical issues.\
\
Low risk: high credibility auditors, no critical issues\
Medium risk: credible auditors, just a few critical issues\
High risk: many critical issues / no audits

**Dominance of Value Locked**

Total Value Locked (TVL) represents the value of the assets that are currently being staked in a specific protocol. It is an important parameter to understand the health of the project and its self-sustainability.\
We believe that the TVL alone is not enough to assess the importance of a particular DApp. To capture a DAPPS market strength, Stablecomp has created a powerful concept that we call DVL, the Dominance of the Value Locked. \
Each blockchain has its TVL, being the sum of all the TVLs of the DApps built on it.\
The DVL is the percentage ratio between the TVL of the DApp and the sum of all the other DApp TVLs on the given blockchain. This figure offers a clear and robust representation of market share within a certain DeFi ecosystem. \
Since the cryptocurrency market is very volatile and blockchain TVLs can change quickly, , we opted to base our analysis on dynamic data.To reflect the strength of a DApp based on its market share in its blockchain,  we have framed 3 risk zones using the dominance of value-locked statistics.\
\
Low risk: DVL>1%\
Medium risk: 1%>DVL>0,2%\
High risk: DVL<0,2%

**Longevity**

According to the Stablecomp team’s analysis of DeFi history, knowing how long a project has been active is essential to understand its level of risk. Most of the "rug pulls" on DeFi platforms have occurred in the first 60 days of the project's life.For this reason, Stablecomp evaluates longevity as a risk assessment parameter too.Once again, projects are divided into 3 risk levels.\
\
Low risk: one year or more\
Medium risk: six months or more but less than one year\
High risk: less than six months<br>


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