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Risk Report Template

Metadata​

Include the following variables with the information compiled for the respective market in the header of the risk report:

export const pool_Id = '0x39b...'
export const asset = '0x6d8...'
export const rating = 'medium'
export const pool_risk = 'low'
export const asset_risk = 'low'
export const oracle_risk = 'low'
export const market_risk = 'medium'
export const collateral_risk = 'low'

Summary​

Provide a brief overview of the market covered, key findings, and links to key resources (asset homepage, stats, documentation, etc.).

Pool Risk​

Provide all relevant information that is used to assess the lending pool risk. In particular, discuss the following items:

  • Smart contract risk
  • Counterparty risk

Derive the appropriate pool risk rating using the following guidelines:

  • ⬜ Neutral: Uses a factory extension and has no counterparty risk (achieved by pool immutability)
  • 🟩 Low: Uses a factory extension or comparable (in terms of fail-safes, audits, and transparency), low counterparty risk (achieved e.g. through a decentralized governance process)
  • 🟨 Medium: Uses an audited "experimental" extension with both source code and audit report publicly available, medium counterparty risk (e.g. due to a centralized governance process)
  • 🟥 High: Else

Asset Risk​

Provide all relevant information that is used to assess the asset risk. In particular, discuss the following items:

  • Smart contract risk
  • Counterparty risk
  • Depeg risk

Derive the appropriate asset risk rating using the following guidelines:

  • ⬜ Neutral: Native asset or comparable (e.g. WETH is comparable to ETH for the purpose of this report)
  • 🟩 Low: "Blue-chip" asset or comparable (in terms of smart contract, counterparty and depeg risk)
  • 🟨 Medium: Other assets with an audited, standard token implementation (e.g. ERC-20, ERC-4626) and both source code and audit report publicly available. Medium counterparty risk
  • 🟥 High: Else

Oracle Risk​

Provide all relevant information that is used to assess the oracle risk. In particular, discuss the following items:

  • Smart contract risk
  • Price composition
  • Price timeliness
  • Oracle fail-safes

Derive the appropriate oracle risk rating using the following guidelines:

  • ⬜ Neutral: No oracle used
  • 🟩 Low: Median (or another robust aggregation technique) of at least two price sources including one off-chain source. Fail-safes for staleness and other failure sources (if any) in place. Audited implementation.
  • 🟨 Medium: TWAP (or another robust aggregation technique) of a single price source or insufficient fail-safes. Audited implementation.
  • 🟥 High: Else

Market Risk​

Use the Standard Market Risk Model, or an advanced model, to assess an asset's Market Risk.

Note that each enabled collateral asset is accompanied with dedicated risk parameters resulting in a lending pair specific Market Risk. According to the Standard Market Risk Model, the asset's overall risk is then estimated using the Max-aggregator function.

If an advanced model is used, explain the model including its assumptions and calibration technique or reference an appropriate resource that discusses this model.

Collateral Risk​

Outline the asset's full collateral chain (i.e. the graph of all collateral asset/debt asset relationships that include the asset in question in a path).

The collateral (chain) risk rating then is simply the worst rating found across all connected (directly or indirectly) collateral assets.