OptyFi features a flexible risk management framework that can be highly customized and applied at a granular (strategy) level. Each liquidity pool integrated into the OptyFi Protocol is assigned a pool rating. Each strategy is assigned a risk profile based on the ratings of pools involved in the strategy as well as the complexity of the strategy.
Currently the OptyFi Protocol implements three pool ratings:
Tier 1 (T1): Low Risk
Tier 2 (T2): Medium Risk
Tier 3 (T3): High Risk
The system is flexible to accommodate an arbitrary number of pool ratings without modification to smart contract code.
Each liquidity pool integrated with the OptyFi Protocol is assigned a pool rating. This rating is currently established by governance vote. However in the future, governance may vote to use an external service (such as defiscore.io), or subscribe to pool ratings from community risk analysts.
Currently, all pools for a given protocol are assigned the same rating, as follows:
Each strategy is assigned a risk profile based on the ratings of pools involved in the strategy along with the complexity of the strategy. Currently, the following risk profiles are defined:
Hold In Vault
Multi-Step, No Borrow
T2 or T3
Multi-Step, With Borrow
The system allows risk profiles to be defined flexibly without modification to smart contracts.
In addition to pool ratings and strategy risk profiles, investment limits are also placed on pools and protocols.
The limits work as follows:
At the protocol level, set:
Protocol Investment Limit Mode = Amount or Percent.
Protocol Max Percent (to be ignored if Protocol Investment Limit Mode = Amount).
If Protocol Investment Limit Mode = Percent, and:
Pool Max Percent value exists → apply Pool Max Percent as limit.
Pool Max Percent does not exist → get Protocol Max Percent.
If Protocol Investment Limit Mode = Amount:
Apply Pool Max Amount as limit.
To better understand the application of these investment limits, take a look at the examples below.