Understanding Risk Scores

Oracled provides quantified risk assessments to help you make informed decisions. This guide explains how to interpret risk scores and what they mean for your investment strategy.

Risk Score Levels

🟢 LOW RISK

What it means:

  • Token shows strong positive indicators

  • Minimal red flags detected

  • Generally safer for investment

  • Lower probability of rugpull or scam

Typical characteristics:

  • Decentralized holder distribution (top 10 < 20%)

  • Locked liquidity >10% of market cap

  • Contract ownership renounced

  • Verified, audited contract

  • Active, transparent community

  • Consistent trading patterns

  • No suspicious wallet activity

Investment considerations:

  • Suitable for most risk tolerances

  • Still requires due diligence

  • Monitor for changes

  • No guarantee of profits

🟡 MEDIUM RISK

What it means:

  • Mixed signals detected

  • Some concerns present

  • Requires careful evaluation

  • Moderate investment caution advised

Typical characteristics:

  • Moderate concentration (top 10 = 20-40%)

  • Liquidity 5-10% of market cap

  • Some contract concerns

  • New token (<7 days old)

  • Limited social validation

  • Recent volatility

  • Unclear team information

Investment considerations:

  • Acceptable for experienced traders

  • Smaller position sizes recommended

  • Close monitoring required

  • Have exit strategy ready

🔴 HIGH RISK

What it means:

  • Significant red flags present

  • High probability of problems

  • Danger of loss

  • Extreme caution or avoidance advised

Typical characteristics:

  • Highly concentrated (top 10 > 50%)

  • Low/unlocked liquidity (<5%)

  • Dangerous contract permissions

  • Honeypot indicators

  • Anonymous or absent team

  • Suspicious trading patterns

  • Known scam indicators

Investment considerations:

  • Avoid unless expert with tiny allocation

  • Assume high loss probability

  • Exit quickly if entering

  • Not suitable for most investors

Risk Factors Analyzed

Holder Distribution (Weight: 25%)

What's analyzed:

  • Percentage held by top 10 wallets

  • Percentage held by top 20 wallets

  • Number of unique holders

  • Holder growth trends

Why it matters:

  • High concentration = dump risk

  • Few holders = manipulation potential

  • Declining holders = red flag

  • Growing holders = positive sign

Scoring:

  • 🟢 Top 10 < 20%, growing holders

  • 🟡 Top 10 = 20-40%

  • 🔴 Top 10 > 50%, declining holders

Liquidity Analysis (Weight: 20%)

What's analyzed:

  • Total liquidity in USD

  • Liquidity-to-market-cap ratio

  • Lock status and duration

  • LP provider count

Why it matters:

  • Low liquidity = hard to sell

  • Unlocked = rug pull risk

  • Concentrated LP = control concerns

  • Declining liquidity = warning

Scoring:

  • 🟢 >10% market cap, locked 6+ months

  • 🟡 5-10% market cap, short lock

  • 🔴 <5% market cap, unlocked

Contract Security (Weight: 20%)

What's analyzed:

  • Ownership status (renounced?)

  • Mint authority (disabled?)

  • Freeze functions

  • Hidden functions

  • Upgrade mechanisms

Why it matters:

  • Unrenounced = dev control

  • Mint authority = inflation risk

  • Freeze = honeypot potential

  • Hidden functions = unknown risks

Scoring:

  • 🟢 Renounced, verified, safe

  • 🟡 Some permissions, verified

  • 🔴 Dangerous permissions, honeypot

Trading Patterns (Weight: 15%)

What's analyzed:

  • Volume consistency

  • Buy/sell pressure

  • Transaction frequency

  • Whale activity

  • Bot detection

Why it matters:

  • Manipulation indicators

  • Artificial volume

  • Coordinated dumps

  • Bot trading patterns

Scoring:

  • 🟢 Organic, consistent patterns

  • 🟡 Some irregularities

  • 🔴 Clear manipulation signs

Social & Community (Weight: 10%)

What's analyzed:

  • Social media presence

  • Community engagement

  • Team transparency

  • Development activity

Why it matters:

  • Anonymous teams = risk

  • Inactive community = abandonment

  • No social = potential scam

  • Engagement = legitimacy indicator

Scoring:

  • 🟢 Active, transparent, engaged

  • 🟡 Limited but present

  • 🔴 Absent or suspicious

Token Age & History (Weight: 10%)

What's analyzed:

  • Time since launch

  • Price history

  • Holder retention

  • Previous incidents

Why it matters:

  • New = higher risk

  • History = track record

  • Retention = satisfaction

  • Incidents = warning signs

Scoring:

  • 🟢 >30 days, clean history

  • 🟡 7-30 days

  • 🔴 <7 days or incidents

Interpreting Risk Assessments

Reading the Full Report

Risk Score Section

Risk Level: MEDIUM 🟡
Confidence: High
Based on: 12 factors analyzed

  • Risk Level: Overall assessment

  • Confidence: Data quality/completeness

  • Factors: Number of metrics evaluated

Red Flags Specific concerns listed:

  • 🚩 Critical issues (immediate concern)

  • ⚠️ Warning signs (caution advised)

  • 👀 Watch items (monitor closely)

Green Flags Positive indicators:

  • ✅ Strong positives

  • 👍 Good signs

  • 📈 Improving metrics

Context Matters

Same risk score, different scenarios:

Scenario 1: MEDIUM Risk - Acceptable

  • 30-day old memecoin

  • Growing community

  • Moderate whale concentration

  • Good liquidity, locked

  • → Manageable risks for experienced trader

Scenario 2: MEDIUM Risk - Concerning

  • 2-day old token

  • Declining holders

  • Unlocked liquidity

  • Anonymous team

  • → Too many unknowns, avoid

Always read the full analysis!

Risk Score Changes

Improving Scores

Factors that can improve risk:

  • Time passing (token aging)

  • Liquidity additions/locking

  • Holder distribution improving

  • Positive developments

  • Community growth

Worsening Scores

Factors that increase risk:

  • Liquidity removal

  • Whale accumulation

  • Holder departures

  • Negative news

  • Contract changes

Monitoring

Ask Oracled:

"How has the risk score for [address] changed
over the past week?"

Track changes to spot trends.

Using Risk Scores in Decisions

For Conservative Investors

Strategy:

  • Focus on 🟢 LOW risk only

  • Require locked liquidity

  • Prefer established tokens (>30 days)

  • Small position sizes

  • Exit on risk increases

Acceptable profile:

  • LOW risk score

  • All green flags present

  • No critical red flags

  • Growing metrics

  • Transparent team

For Moderate Risk Takers

Strategy:

  • Accept 🟡 MEDIUM risk

  • Evaluate specific concerns

  • Diversify across multiple tokens

  • Set stop losses

  • Monitor regularly

Acceptable profile:

  • MEDIUM risk acceptable

  • Understand specific risks

  • Have mitigation plan

  • Can handle volatility

  • Quick exit capability

For Aggressive Traders

Strategy:

  • May take 🔴 HIGH risk

  • Very small allocations only

  • Quick entry/exit

  • Constant monitoring

  • Accept high loss probability

Acceptable profile:

  • Fully understand risks

  • Micro positions only

  • Expert knowledge

  • Can afford total loss

  • Trading not investing

Red Flags Hierarchy

Critical (Never Ignore)

🚩 Honeypot detected - Cannot sell 🚩 Single wallet >50% - Massive dump risk 🚩 Unlocked liquidity + withdraw function - Instant rug 🚩 Hidden mint function - Inflation attack 🚩 Known scam pattern - Proven fraud

Action: AVOID

Major (High Concern)

⚠️ Top 10 hold >40% - Concentration risk ⚠️ Liquidity <5% market cap - Exit problems ⚠️ Unrenounced ownership - Dev control ⚠️ Declining holder count - Abandonment ⚠️ Zero social presence - Likely scam

Action: Extreme caution or avoid

Minor (Watch Closely)

👀 New token (<48h) - Insufficient data 👀 Moderate concentration - Monitor 👀 Short liquidity lock - May unlock soon 👀 Limited social - Early stage 👀 High volatility - Risky trades

Action: Acceptable with awareness

Limitations of Risk Scores

What Scores DO

✅ Quantify observable risk factors ✅ Identify red/green flags ✅ Compare tokens objectively ✅ Provide data-driven assessment ✅ Alert to danger signs

What Scores DON'T DO

❌ Predict future prices ❌ Guarantee safety ❌ Detect novel scams ❌ Account for black swans ❌ Replace your judgment

Always Remember

  • Low risk ≠ guaranteed profit

  • High risk ≠ certain loss

  • Markets are unpredictable

  • Scores based on current data

  • Can change rapidly

  • Do your own research (DYOR)

Practical Examples

Example 1: Token A

Risk Score: LOW 🟢

Factors:

  • ✅ Top 10 hold 15%

  • ✅ Liquidity 12% MC, locked 6 months

  • ✅ Contract renounced, verified

  • ✅ 2,500 holders, growing

  • ✅ Active community

  • ✅ 45 days old, stable

Interpretation: Relatively safe for moderate allocation

Example 2: Token B

Risk Score: MEDIUM 🟡

Factors:

  • ⚠️ Top 10 hold 35%

  • ✅ Liquidity 8% MC, locked 1 month

  • ✅ Contract verified

  • ⚠️ 450 holders

  • ⚠️ 5 days old

  • 👀 Limited social

Interpretation: Acceptable for small position with monitoring

Example 3: Token C

Risk Score: HIGH 🔴

Factors:

  • 🚩 Top wallet holds 55%

  • 🚩 Liquidity 3% MC, unlocked

  • ⚠️ Ownership not renounced

  • ⚠️ 85 holders, declining

  • 🚩 No social media

  • ⚠️ 18 hours old

Interpretation: AVOID - multiple critical issues

Best Practices

  1. Always Check Risk Score: Before any investment

  2. Read Full Analysis: Not just the score

  3. Understand Why: Know which factors matter

  4. Monitor Changes: Risk evolves over time

  5. Combine with Research: Use as one data point

  6. Match Risk Tolerance: Align with your comfort

  7. Size Accordingly: Higher risk = smaller position

  8. Have Exit Plan: Especially for medium/high risk

  9. Cross-Reference: Verify with other tools

  10. Trust Your Gut: If something feels off, it probably is

Next Steps

Get your first risk assessment: Visit oracled.xyz and analyze a token!

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