Example Asset Risk Scores and Parameters
Let’s walk through an illustrative example of how different assets might be scored and what parameters they would get. Table below shows an example collateral types. (These are simplified example values for illustration only; actual scores and parameters would be determined by rigorous analysis and governance approval.)
Simple Aggregate Risk Score (before adding weights, discounts, and premium)
1.92
3.23
2.77
3.69
1.85
Next stabilityFee, Annual %
4.06
6.28
7.1
5.25
3.99
Smart Contract Risk (1-low, 10-high)
2
3
2
3
1
Token Holding Concentration + Market Cap Risk (1- many holders, high market cap, 10-high concentration, low market cap)
3
4
5
7
1
2nd degree
8
6
3
10
10
Counter-party risk (token governance centralization risk, 1-low, 10-high centralization)
1
3
1
3
1
2nd Degree Counter-party Risk (i.e. USDC in their system)
2
4
2
6
1
DEX Rolling 30 days Volume Risk Score (1-high volume, 10-low volume relative to other collaterals)
1
2
7
1
1
2nd degree
2
6
3
2
2
Rolling 60 days Volume Risk Score (1-high volume, 10-low volume, relative to other collaterals)
1
1
1
1
1
2nd degree
2
4
4
5
2
Collateral Volatility Risk Score (1-low volatility, 10-high volatility relative to other collaterals), Normalizing and comparing volatility derived from hourly and yearly volatility of the last day, 90 days, 1y, and 2y volume.
1
3
4
5
1
Liquidity - DEX Slippage Score (1-low slippage, 10- high slippage, relative to other collaterals)
1
2
1
2
1
2nd Degree
Liquidity - CEX Slippage Risk Score (1-low slippage, 10-high slippage, relative to other collaterals)
1
2
1
2
1
2nd Degree
Oracle risk
1
3
2
2
1
Table 1: Illustrative risk scores and parameters for different collateral types.
For all listed collaterals, we visualize their positions in a Collateral Risk Matrix – essentially a heat map of risk scores – to get a holistic view of the portfolio. This helps us ensure we’re not overly exposed to any cluster of high-risk assets and that our risk is balanced across categories.