Risk Scoring
Risk score calculation is the process by which the risk engine determines a risk score. The risk score demonstrates the level of risk that is associated with a specific asset, portfolio, pool or provider.

Overview

The risk engine determines a risk score by comparing sets of attributes that identify an asset. These sets of attributes are harvested each time when a new block is mined and analyzed in real-time from mempool trough AI & ML models based on previous data history sets.
The following process describes how risk assessment works:
  1. 1.
    The incoming data set related to a specific asset.
  2. 2.
    The risk engine collects all available data set attributes from the newly mined block.
  3. 3.
    After the attributes are collected, the risk engine: - Calculates attributes average weight based on data sets history and new data sets - Calculates risk score (risk score is a number between 1-10)

Risk Score Values

Score
Value
Low
<= 2
Medium
>= 3 && <= 6
High
> 6

Risk Score Formulas

Asset (pool) risk score:
assetRiskScore = (total weight of mismatched asset attributes /
total weight of all asset attributes) × 10
Portfolio risk score:
portfolioRiskScore = (sum of portfolio assets risk score values /
number of portfolio assets)
Protocol risk score:
protocolRiskScore = (sum of protocol pools risk score values /
number of pools)

Asset Attributes

Attribute Name
Weight Value
Threshold
isStableCoinPool
30
bool true
dayLiquidityChange
20
<= -25%
impermanentLoss
20
<= 0.6%
poolAge
10
>= 1M
poolUsers
10
>= 200
poolLiquidity
10
>= $500K

Impermanent Loss Estimation

Impermanent loss occurs when the price of the assets in the pool changes. (change is calculated by price change ratio in the pool and not in the open market)
Price Change
Loss
1.25x
0.6%
1.50x
2.0%
1.75x
3.8%
2x
5.7%
3x
13.4%
4x
20.0%

Risk score types

  • Assets
  • Portfolio
  • Pools
  • Providers