Why TradFi risk thinking does not work for crypto
Traditional financial (TradFi) risk assessment models, like P/E ratios and Value at Risk (VaR), are inadequate for cryptocurrencies. Cryptos operate on decentralized networks, where factors like token distribution, decentralization, and diversity in the network are critical for evaluating risk. The article advocates for a new risk model native to crypto’s blockchain-based architecture, leveraging real-time data to assess network strength instead of relying on outdated TradFi methods.