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By DeRisk
DeRisk is a risk monitoring platform that serves as an “early warning” mechanism to detect risky situations for lending protocols.
DeRisk is a risk monitoring platform that serves as an “early warning” mechanism to detect risky situations for lending protocols.
Benefits: - Allows lending protocols to put measures in place to protect themselves and their users. - Allows for a more efficient capital allocation and more capital flowing instead of being stuck in liquidity pools. - Having DeRisk on Stellar will decrease the chances of acquiring bad debt in the whole ecosystem, which will be an incentive for projects to build on Stellar. - Standardization of loans will lead to easier chain wide liquidations.
DeFi protocols, DEXes and users all have one thing in common. They want to make money, not lose money. If bad debt is acquired by a lending protocol, it’s a big problem not only for that specific lending protocol but even for the rest of projects in the chain. The inherent volatility of the crypto market means that things can go south in a matter of minutes. The liquidity pools can dry up very fast and some loans may not be possible to be liquidated profitably. To solve this problem, lending protocols need to have allocated a large amount of capital “just in case”, which implies having a large amount of capital stuck in their security pools, which means a high cost of capital for the DeFi protocols, and a lot less capital flowing in the whole ecosystem. Other lending protocols have it worse, they can’t allocate such cushioned, “just in case” liquidity pools, which makes it risky for the borrowers.
DeRisk monitors lending protocols and loans and compares them against available capital on DEXes, and liquidators' smart contracts and makes it very easy to detect loans with higher risk of becoming underwater. To illustrate, consider a protocol that has lent ~$15mil worth of tokens while available capital on DEXes is just above $10mil. This situation poses a considerable risk not only to that protocol, but to other lending protocols and the broader DeFi ecosystem.
This monitoring results in a powerful early warning system that benefits the entire ecosystem. Part of DeRisk is also the possibility to compare lending protocols and to see individual loans with a risk of being liquidated and the loan history.
Our high level company goal is to “Take care of risk on chain” and we want to do that for everyone. Thanks to Stellar’s market positioning we can reach the user base that we would be able to elsewhere. DeRisk platform is for us the first step in bringing other projects we do elsewhere to Stellar. Particularly Carmine Options AMM and hedging and insurance built on top of that, which could massively leverage the on-ramp solutions combined with following regulations.
In this application it is the DeRisk platform and in particular the early warning system for lending protocols that watches for risk of under the water loans. The risk of under the water loans is not the only thing we are working on the DeRisk platform, we will be adding monitoring and early warning systems for other DeFi risks and we have under development BI that could be easily used by DeFi (and other) protocols.
The DeRisk platform is an entry solution that will be followed by Carmine Options AMM and risk and hedging products built on top of it. For example insurance against drop of value of crypto assets that will result in higher liquidity of user assets, hedging against impermanent loss, insurance against under the water loans and more.
We are also building governance solution that will be plug and play solution for protocols from early governance days, through help in listing protocol tokens to token distribution. Essentially resulting in projects focusing on building the important core and not something that someone else has already done. This together with the BI and risk monitoring will reduce the cost and mainly time to build and deliver new projects on Stellar.
$50.0K
Marek Hauzr
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