> ## Documentation Index
> Fetch the complete documentation index at: https://flowlayer.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Score

> A transparent, inspectable risk score for every reward market.

## Purpose

A leaderboard of high-reward markets is only useful alongside a measure of how likely each market is to lose money. The risk score is that measure.

The methodology is documented in full. A score that can be inspected earns more trust than an opaque one, so every input and the logic combining them is described below.

<Info>
  The score answers one question: how risky is it to farm rewards in this market right now? A low score indicates rewards are likely to persist; a high score indicates an adverse fill could erase them.
</Info>

***

## Inputs

<CardGroup cols={2}>
  <Card title="Volatility (multi-window)" icon="wave-square">
    Price movement across 3-hour, 24-hour, and 7-day windows. Low, stable volatility is the strongest indicator of a safe market.
  </Card>

  <Card title="Time to Resolution" icon="hourglass-half">
    Markets near resolution carry sharper, more sudden risk. Distance to resolution moderates the score.
  </Card>

  <Card title="News and Catalyst Exposure" icon="newspaper">
    Identifies markets tied to imminent, binary, headline-driven events, where a single update can move price sharply.
  </Card>

  <Card title="Spread Width" icon="arrows-left-right">
    Wide spreads often signal uncertainty and adverse-fill risk, even where reward rates appear large.
  </Card>

  <Card title="Order-Book Depth" icon="layer-group">
    Thin books move more on each fill, amplifying the cost of an ill-timed fill.
  </Card>

  <Card title="Reward Rate" icon="hand-holding-dollar">
    The reward on offer, used as the numerator against the factors above to produce a risk-adjusted return.
  </Card>
</CardGroup>

***

## How the Inputs Combine

<Steps>
  <Step title="Normalize each input">
    Every signal is scaled to a common 0–100 range so no factor dominates due to its units.
  </Step>

  <Step title="Weight by impact on adverse-fill risk">
    Volatility and book depth carry the most weight, as they most directly determine the cost of a bad fill. Time to resolution and catalyst exposure adjust the result.
  </Step>

  <Step title="Produce a 0–100 risk score">
    A low score indicates a safe market; a high score flags danger. The score is displayed next to the raw reward rate.
  </Step>

  <Step title="Rank by risk-adjusted return">
    The leaderboard divides reward rate by risk, surfacing markets that pay well relative to their danger.
  </Step>
</Steps>

***

## What the Score Is Not

<Warning>
  The risk score is a decision aid, not a guarantee. It cannot predict surprise news and does not remove the possibility of loss. It lowers the odds of a poor outcome; it does not eliminate them. See [Risks](/risks) for the full picture.
</Warning>