RiskDAO is a risk assessment and risk management service DAO initiated by B.Protocol, 1kx research arm, La-Tribu dev team, and other researchers and devs.
Lending, borrowing, and CDP protocols account for over 30% of DeFi’s $110B total value locked. As a dominant sector in a rapidly growing industry, it’s important that we build open-source tools and resources to make protocols safer and the risks more clear for users. Risk DAO will aim to do just that.
Tens to hundreds of millions of dollars have been wiped out or put at risk due to economic exploits and/or mismanagement of borrowing protocols, further highlighting the need for objective third-party risk assessments and frequent monitoring.
Our new methodology takes into account real-world liquidation data of popular assets from centralized exchanges, along with the price trajectory of the assets in question. We extrapolate the liquidation sizes and price trajectory to the asset we wish to analyze, and simulate the outcome based on the asset’s available DeFi liquidity. This approach eliminates most of the assumptions that are usually made in risk assessments in the DeFi ecosystem regarding user behavior during market crashes and makes it more feasible to analyze the risk of a platform, including for multichain lending platforms, where the data for user behavior is even more sparse.
Here’s a summary of the services we’ll offer to DeFi protocols and L1s, all of which are rendered as one-time audits, with the potential for ongoing collaboration:
- Stress tests (e.g. bad debt likelihood, liquidation performance)
- Parameter optimization (e.g. collateral factor (MCR), liquidation penalty)
- Survey of collateral risks (e.g. price oracle strength, liquidity)
- Chain-specific analysis (e.g. liquidity propagation time, block time, and gas costs)
If you’re still unsure, explore what we’ve built further by reading Data Extrapolation Framework for Risk Assessment of DeFi Lending Platforms or the full report outlining our risk analysis framework here.
Last, but not least, like any new DAO we’re looking for talented individuals. If you’re interested in math, risk analysis, data analytics, or becoming a researcher, join our Discord and fill out a membership request. Specifically, we’re looking for those with skills in:
• Technical Writing (academic experience is a plus)
• Designing and implementing mathematical models
• DeFi Security
• DeFi Research and Writing
• Data Analytics