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Learn more about how risk parameters on Euler are determined |
The Euler risk framework aims to do two things:
- Maximise capital efficiency through borrowing and lending activity; and
- Minimise risk and the probability of bad debts.
To achieve this, a methodology to stress test individual assets as well as simulate a portfolio of assets in tail risk scenarios.
Ranking all available ERC20 tokens according to risk parameters:
- Smart Contract Risk
- Centralisation
- Volatility
- Liquidity
Additionally, assessing Oracle Risk
In order to arrive at:
- Collateral Factor
- Borrow Factor
- Cross Tier Factor
Simulate risk scenarios to maximise borrowing and lending activity and minimise bad debts
Update factors and methodology through governance