- Summary:
- Aurigami, the lending and borrowing platform, has partnered with Risk DAO to help it manage its risk exposure better. We tell you how.
Aurigami, the lending and borrowing platform, has enlisted Risk DAO to do a thorough analysis of the protocol’s risk factors. By doing so, the project is adopting a preventative posture toward mitigating risks and improving the return on investment. Recent testing using the Risk DAO framework confirmed that Aurigami had no value at risk, even under extreme conditions. This is attributable to the fact that it has conservative lending parameters that are in harmony with the cash on hand.
How the Risk DAO assessment changes things
The evaluation allowed the Aurigami team to simulate the protocol’s worst-case situations and undertake a comprehensive quantitative analysis. Therefore, Aurigami has taken Risk DAO’s analysis and implemented some of its recommendations. Notably, it has placed limits on borrowing and lending with respect to all assets that can be collateralized. Many digital assets platforms have gone under in recent times because of high risk exposure.
Also the project will adjust the collateralization ratios of some borrowable assets such that they are optimal. That will allow the platform’s most savvy users to maximize its benefits in terms of leverage and capital efficiency.
Risk DAO, an initiative of B.Protocol and 1kx, is a service DAO with the goal of creating a new open-source risk assessment system and conducting related audits. It does its analysis by looking back at actual historical data and forward-looking liquidity and price scenarios. One of Aurigami’s main focuses since day one has been on preventing and mitigating potential disasters. Risk DAO’s unique set of algorithms is tailor-made to aid the platform’s ongoing risk assessment, making it a useful addition.
The two firms have agreed to maintain their collaborative relationship and supervise the lending protocol’s risk management going forward. Also, Risk DAO and Kyberswap have collaborated to create a real-time analytics dashboard that will allow Aurigami to keep tabs on key performance indicators (KPIs) connected to risk. That will allow the company to adapt swiftly to shifting liquidity conditions.