Market Adoption

Analyzes market capitalization relative to leading peers in the same category, serving as a proxy for market confidence and the issuer's incentive to address material deficiencies.

Scoring divides the protocol's market cap by the category median (not the maximum), with assets grouped into peer categories — Stable–Base, Stable–Alt, LST, LRT, and Wrapped. The asymmetric range reflects market cap's nature as a noisy proxy: it can confirm absence of obvious risk but cannot substitute for direct evaluation of reserve quality, governance, or legal structure.

Tier	Market Size vs. Peers (% of median)	Reasoning	Evidence
Category leader	25% to 100%+	Convergence of liquidity depth (thicker secondary markets, tighter spreads, larger natural arbitrageur base), continuous regulatory and analyst scrutiny that forces institutional-grade standards, and revealed preference of due-diligence-driven counterparties — all structurally risk-reducing.	Top-quintile protocols within each category historically show lower rates of critical security incidents per dollar deployed than the bottom quartile (Halborn 2023, CertiK 2024). USDC absorbed approximately $3B in net redemptions over 72 hours following the SVB collapse without structural failure.
Established baseline	10% to 25%	Sufficient scale to demonstrate operational viability, attract institutional integrations, and maintain meaningful liquidity depth under normal conditions.	Examples: LUSD, FRAX, PYUSD in stablecoin categories; rETH, swETH in LSTs.
Transitional	5% to 10%	Real, functional protocol with material market presence, but adoption level has not been tested against a category-wide stress event.	Examples: newer LRT protocols, recently-launched RWA wrappers in the 12–18 months following launch.
Fragility zone	Sub-5% of category median	Convergence of three risk factors at small relative scale: liquidity fragility (thin secondary markets amplify exits into runs), operational resource constraints (limited budget for audits, incident response, controls), and counterparty concentration.	Iron Finance held $2B at peak but its collateral base was structurally thin. Small relative scale within a category produces thin secondary-market depth and weak arbitrage support, amplifying losses under redemption pressure. Mai Finance and various pre-2022 algorithmic stablecoins demonstrated this dynamic.