Monitoring Economic Risk in DeFi: IntoTheBlock Releases an Alpha Preview of DeFi Risk Radar
ITB DeFi Risk Radar enables real time monitoring of economic risk conditions in DeFi protocols. Today is just a preview of what’s coming…
Risk management has become one of the most important elements for the institutional adoption of decentralized finance(DeFi). While the benefits of DeFi have become increasingly apparent in light of the events of the last few months, the ecosystem remains incredibly vulnerable to different risk vectors.
· Technical Risk: Based on technical exploits in DeFi protocols.
· Governance Risk: Triggered by the manipulation of governance proposals in DAOs.
· Economic Risk: Based on regular exploits of economic conditions in DeFi protocols.
From those vectors, economic risk remains the most overlooked area of risk management. Economic risk takes different forms such as liquidations, impermanent loss, bad debt, whales inflows or outflows and many others. While economic risk doesn’t get the headlines of DeFi hacks, it is responsible for the majority of losses in DeFi protocols every day.
