"Aikido is the direct opposite of sport."
Morihei Ueshiba, founder of aikido
What are grades in aikido?
Grades in aikido are used to create a hierarchic structure in the dojo. The position in this structure, the knowledge of aikido and the technical qualities all weigh in on how high the grade is of the student.
The grades are divided in kyu and dan grades. You wear a white belt during the kyu grades and a black belt during the dan grades. How many kyu grades there are depends on the teacher. The first dan shows that the student has a global understanding of aikido and its techniques. Shodan, the Japanese word for the first dan, literally means "the first step". At shodan you begin your journey of aikido.
How to grade a student
The purpose of aikido is the development of the individual. To grade a student in aikido is therefore very difficult, because how do you grade someone on their individual growth as a human being? Many teachers choose to grade their students solely on the techniques of aikido, but by doing so they shift the purpose of aikido to techniques.
Techniques are a tool to study aikido. By studying these techniques the student can learn the principles and philosophy of aikido. Technique is only a small part of aikido, the work in the dojo, a good mental and physical attitude and knowledge of aikido is what's important in grading a student.
Giving a grade
The teacher decides which grades he gives in his dojo. In this way he decides what kind of structure he has in his dojo. The way to give grades to his students is up to him to decide. A grade only has meaning in the dojo of your teacher where you have received a grade and position. Nowhere else.
Alain Peyache
http://alainpeyrache.nl/en/DeDojoHetGradenSysteem.php