Four Indices That Matter: LHI, DHI, TI, MRI Explained
Understanding the 4-index system that evaluates token risk: liquidity health, distribution fairness, contract safety, and market readiness.
Aritect Labs 
Every day, 1000+ new tokens launch across multiple chains. Manual analysis of each takes 15-30 minutes — covering less than 5% of the market. The question isn’t whether to automate risk assessment, but how to do it right.
We built a 4-index system that evaluates tokens in under 50ms. Here’s how it works.
The Problem: 8+ Dimensions of Risk
Evaluating a token requires analyzing liquidity depth, holder distribution, contract rights, pool age, burn status, transaction patterns, whale concentration, and Gini coefficient. Each dimension matters. Miss one, and you miss the risk.
The Solution: Four Composite Indices
Risk Assessment Flow
Liquidity Health
Distribution Health
Technical Safety
MRI Decision Tree
Liquidity Health Index (LHI)
What it measures: Pool depth and sustainability.
Starting at 100, penalties apply for:
- No initial liquidity: -30.
- Low liquidity (outside min/max range): -20 × deviation.
- Unlocked liquidity: -25.
- Low burn percentage: -15 × (1 - burn/threshold).
- Fresh pool (less than 5 min): -10.
Why it matters: A token with 90+ LHI has stable, locked liquidity. Below 50? High rug risk.
Distribution Health Index (DHI)
What it measures: Token concentration among holders.
Starting at 100, penalties for:
- Top holder exceeds threshold: -25 × excess ratio.
- Top 10 holders exceed threshold: -20 × excess ratio.
- Gini coefficient out of range: -15.
- Excessive whales: -20 × (whales/threshold - 1).
Why it matters: DHI below 60 signals centralized control. One wallet can dump the market.
Technical Index (TI)
What it measures: Contract safety and immutability.
Starting at 100, penalties for:
- Mint authority not renounced: -40.
- Unknown renounce status: -20.
- Freeze authority enabled: -30.
- Unknown freeze status: -10.
Why it matters: TI below 70 means the contract has dangerous permissions. Developer can mint or freeze at will.
Market Readiness Index (MRI)
What it measures: Overall trading readiness.
Formula: MRI = 0.4 × LHI + 0.3 × DHI + 0.3 × TI + time_bonus.
Time bonus:
- Pool age greater than 30 min: +10.
- Pool age greater than 10 min: +5.
- Otherwise: 0.
Why it matters: MRI is the final verdict. Above 75? Safe to trade. Below 50? Stay away.
Real-World Application
Token A: LHI 85, DHI 72, TI 90, MRI 82.
- Strong liquidity, decent distribution, safe contract.
- Verdict: Green light.
Token B: LHI 45, DHI 35, TI 30, MRI 38.
- Weak liquidity, centralized holdings, dangerous permissions.
- Verdict: High rug risk.
The Takeaway
Risk assessment isn’t binary. It’s multidimensional. Four indices give you a complete picture in milliseconds—liquidity health, distribution fairness, contract safety, and market readiness.
The math is deterministic. The decision is yours.
