What is probability of loss (PoL)?
Probability of Loss (PoL) is CORE3’s unbiased, shared, and data-driven metric designed to reflect a project’s risk exposure on a scale from 0 (Exceptional) to 100 (Critical risk). The metric was designed to create a unified risk language on the crypto market, suitable for investors, builders, and institutions. The outcome is a probability-based risk indicator that reflects how exposed an entity is to loss-causing events under current conditions. As a crypto risk metric, PoL standardizes what was previously scattered across disconnected data sources. The objectives behind Probability of Loss are to:- Quantify non-price risk at the project level
- Standardize loss-risk assessment across various crypto projects
- Reduce information asymmetry between project teams and users
- Support informed decision-making without implying endorsement or safety
How the probability of loss is calculated
Probability of Loss (PoL) is a risk indicator designed to express the likelihood of loss based on structured, multi-dimensional risk analysis. PoL is derived through a multi-step calculation process that ensures consistency, comparability, and interpretability across different entities.Calculation score formation
Each project or exchange is evaluated using a dedicated methodology composed of multiple risk metrics. These metrics may include, but are not limited to, security factors, operational risk, transparency, and solvency. For each entity:
- Individual metrics are weighted according to their relative importance.
- Metrics are summed and multiplied based on methodological rules.
- The result is a Calculation Score ranging from 0 to 100.
Inversion into probability of loss (PoL)
To express risk in a more intuitive and standardized way, the Calculation Score is inverted to produce the Probability of Loss (PoL).
- Calculation Score = 100 → PoL = 0 (lowest probability of loss)
- Calculation Score = 0 → PoL = 100 (highest probability of loss)
- PoL always increases as risk increases
- PoL is directly interpretable as a risk likelihood indicator, not a performance score
Mapping PoL to crypto asset ratings
Each PoL value is mapped to a rating category, using predefined ranges. Ratings follow a familiar, credit-style structure to ensure clarity for institutional and regulatory users.
| Rating Tier | Meaning |
|---|---|
| AAA / AA / A | Very low probability of loss |
| BBB / BB / B | Moderate and increasing probability of loss |
| CCC / CC / C | High probability of loss |
| DDD / DD / D | Critical risk levels |
Confidence levels
Ratings are further grouped into Confidence Levels, providing a higher-level interpretation layer for users who require fast, categorical assessment.
Interpretation principles
- PoL is not a price prediction, performance forecast, or investment recommendation.
- PoL reflects risk likelihood, not certainty.
- Ratings and confidence levels are comparative tools, designed to support decision-making, monitoring, and regulatory oversight.
- PoL values are updated as new data, disclosures, or validated inputs become available.
Summary
Probability of Loss (PoL) transforms complex, multi-source risk analysis into a single, interpretable indicator, supported by transparent methodologies, standardized ratings, and confidence groupings.
Project PoL Methodology
How project risk is assessed across 98 metrics
CEX PoL Methodology
How exchange risk is assessed across security, solvency, transparency