Gauntlet makes the following recommendations to optimize risk and capital efficiency for Karura:
- We recommend lowering KSM’s minimum collateral ratio from 1.6 to 1.5.
Since our last recommendations, VaR has decreased from $3.0M to $2.8M. KAR’s VaR has decreased from $1.4M to $1.1M, while LKSM’s VaR has remained flat at $1.6M. KSM’s VaR rose slightly from $5k to $6k. With KSM’s VaR remaining so close to zero, our simulation engine shows that the capital efficiency gain by allowing users to take on KSM debt at a lower ratio more than offsets the slight increase in market risk.
The community should use Gauntlet’s Risk Dashboard to understand better the updated parameter suggestions and general market risk in Karura.