Risk Management in DeFi: Slides and Video
Summary of our recent webinar about risk management in DeFi.
Last week, I presented a webinar about risk management ideas in DeFi protocols. The session outlined some key concepts that could be relevant to traders and investors in DeFi protocols when comes to think about risk.
1) Traditional risk management theory does not apply in DeFi.
2) There is more than one type of risk in DeFi investment strategies.
3) Intrinsic protocol risk describes risks that are based on the normal functioning of a DeFi protocol. Ex: loan liquidations.
4) Exogenous protocol risk describes situations like hacks that fall outside the typical behavior of a protocol.
5) Governance risk refers to risk conditions based on the manipulation of governance proposals.
6) Underlying blockchain risk qualifies risks derived from dependencies on L1 or L2 blockchain runtimes.
7) Market risks capture the exposure that DeFi investments have to macro market conditions.
8) Leveraging blockchain data analysis seems to be one of most effective mechanisms to quantify risk in investment positions in DeFi protocols.
