Risks and Mitigants
Key external risks in the architecture of Resolv are counterparty credit risk, market risk, and liquidity risk. Below is their brief description together with the features of the protocol aimed at managing these risks.
Risk Category | Description | Risk Management |
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Counterparty Credit Risk | Risk of loss due to insolvency of a trading venue. Exposed assets are:
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Market Risk | Risk of loss due to negative funding rates |
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Liquidity Risk | Risks of significant liquidity withdrawals from the protocol affecting its stability. For example, substantial withdrawals from RLP | Redemption of RLP is suspended if USR Collateralization Ratio (CR) is below 110%. |
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