Risk Methodology
Learn more about how risk parameters on Euler are determined
The Euler risk framework aims to do two things:
- 1.Maximise capital efficiency through borrowing and lending activity; and
- 2.Minimise risk and the probability of bad debts.
To achieve this, a methodology to stress test individual assets as well as simulate a portfolio of assets in tail risk scenarios.
Ranking all available ERC20 tokens according to risk parameters:
- 1.Smart Contract Risk
- 2.Centralisation
- 3.Volatility
- 4.Liquidity
Additionally, assessing Oracle Risk
In order to arrive at:
- 1.Collateral Factor
- 2.Borrow Factor
- 3.Cross Tier Factor
Simulate risk scenarios to maximise borrowing and lending activity and minimise bad debts
Update factors and methodology through governance
Last modified 9mo ago