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Opty-Fi
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Risk Framework
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.

Pool Ratings

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:
Protocol
Pool Rating
Aave
T1
Compound
T1
Cream
T2
Curve
T1
dYdX
T1
Dforce
T3
Harvest
T2
Yearn
T2

Risk Profiles

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:
Risk Profile
Description
Pool Ratings
Strategy Complexity
RP0
Default
N/A
Hold In Vault
RP1
Basic
T1
Multi-Step, No Borrow
RP2
Advanced
T2 or T3
Multi-Step, With Borrow
The system allows risk profiles to be defined flexibly without modification to smart contracts.

Investment Limits

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.
Protocol
Protocol Investment Limit Mode
Protocol Max Percent
Pool
Pool Max Percent
Pool Max Amount
Compound
Percent
500%
cDAI
100%
N/A
Compound
Percent
500%
cBTC
Null (defaults to 500%)
N/A
Aave
Amount
200% (ignored)
aDAI
N/A
1,000,000
Aave
Amount
200% (ignored)
aBTC
N/A
1,000
Aave
Amount
200% (ignored)
aETH
N/A
Null (assume Pool Max Amount = 0)
Last modified 5mo ago