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)