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Risk Report Instructions

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.