Counter-Protocol Tech and Economic Risks
The goal of vaults is to strike a balance between preventing exposure to tail technical risk, while giving vault managers the freedom to take on counter-protocol economic risks, since the latter is frequently rewarded while the former is not.
Some of the key tech risks we consider:
Track record of the protocol
Admin key existence and management
Existing audits
Protocol tech risk hedging opportunities
Degree to which the protocol is prone to manipulation
Some of the economic risks that we consider:
Economic exploit risks
Economic stability risks
Collateralization risk (if a system is under-collateralized)
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