Introduction to Xerberus
Start here for a high level summary of Xerberus
Xerberus is an experiment born out of the desire to make crypto safer. We love cryptographic technology as well as the idea of decentralizing power. However, we acknowledge that crypto right now is a hotbed of scams, and too many good people fall victim to malicious individuals.
Crypto was born in 2008 out of the desire to be better than the banks, yet we must acknowledge that crypto is not the safe alternative, quite the opposite. Some people are advocating for government regulation as the answer, but we believe that cannot be the solution. To fill this gap and give crypto users the power to see the truth without a centralized authority telling them whom to trust, we created Xerberus.
Xerberus is many things, but at its core, what we have built is a Decentralized Risk Rating Organization, aimed at filling the gap left by rating agencies in the traditional world. We aim to rate all types of tokens: commodities, securities, derivatives, as well as debt tokens.
We base our risk ratings solely on objective facts: transactions on the blockchains. We believe that markets are more or less efficient, which means all relevant information will manifest in some form of transactions. Unlike traditional markets, the blockchain shows more than just order book transactions. We are able to scan all transactions before and after the marketplace, observing how big players prepare their sell-offs by moving tokens from cold to hot storage and to an exchange. We not only observe project whales and insiders but also all individuals who own a token and which other tokens they own. For example, a project owned by HODLERS will be less affected by news events than a token majority owned by very reflexive traders. Homogeneous groups of holders tend to act similarly, while very heterogeneous ownership structures tend to react differently to inputs. Our analysis does not end there; we also look into the way treasuries connected to projects are managed.
In summary, we consider all objective facts in the form of blockchain transactions that can be obtained and fuse them together in one mathematical model. You can read more about the mathematics here. This forms the basis for our risk scores. We intend to store proofs of our risk scores on the chain for everyone to verify that our risk scores are, in fact, true, given all public transactions.
The ultimate goal is to create a rating system based on objective truth and verifiable by knowledgeable players. We firmly believe that such a system can make crypto safer for all of us.