An Objective Scoring Model is a structured analytical framework that assigns numerical values to various attributes or performance indicators, enabling impartial evaluation and ranking of entities based on predetermined, quantitative criteria. This model reduces subjective bias in assessment.
Mechanism
This model operates by establishing a clear set of weighted criteria, each with defined thresholds or benchmarks. Data points for each entity are collected, normalized, and then processed through an algorithm that applies the assigned weights to calculate a composite score, ensuring consistent and replicable evaluation.
Methodology
In the crypto sector, this methodology finds utility in rating decentralized finance (DeFi) protocols based on security audits, liquidity, and Total Value Locked (TVL), or in assessing potential institutional trading partners on factors like operational reliability, regulatory standing, and market depth in an RFQ environment. The model aims to provide a transparent, data-driven basis for comparison.
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