Risk Management

Since Rysk v2 vaults are made up of decentralised credit facilities which are tradable by market makers, these systems must be risk managed to ensure the market maker does not abuse their position or perform poorly.

The risk management system constantly monitors the funds held by the credit facilities as well as the value of positions held. The primary objectives are to ensure that the funds maintain a margin ratio above a given threshold, that the market makers are not self trading and that the market makers are beating a base rate of return. If a market maker breaches any of the agreed-upon metrics (which is very unlikely) then the market maker will immediately be cut off.

This is monitored through the metrics described below:

• account leverage

• Value at risk (VAR)

• sharpe 1d 3d 7d, 1 month

• avg deposit | withdrawal slippage last $100 $1000 $10000

• avg deposit duration / retention

• deposit/withdrawal volume

• number of users

• large user withdrawals

• volume 1d

• pnl 1m 1h 1d 1w

• drawdown 1m 1h 1d 1w

• owner equity

• counterparties in trades

The risk management system is currently a service operated by the rysk team but decentralising this is part of phase 2, which will demonstrate innovations in token-based decentralised risk management.