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Euler Protocol

Euler Governance

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.

- 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

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Introduction

Methodology