Risk Stratification

Definition ∞ Risk Stratification involves categorizing digital assets or investment opportunities based on their associated levels of financial exposure and potential loss. This process helps investors assess and manage their portfolios by allocating capital according to their risk tolerance. Factors considered include market volatility, regulatory uncertainty, technological maturity, and liquidity. Effective stratification aids in informed decision-making within the volatile digital asset market.
Context ∞ The ongoing discussion around Risk Stratification is paramount for both individual and institutional investors navigating the complex digital asset landscape. The situation often involves debates about appropriate methodologies for assessing novel asset classes and the limitations of traditional risk models. A critical future development involves the creation of more sophisticated, standardized frameworks for risk assessment tailored specifically to blockchain-based assets.