Gauntlet makes the following recommendations to optimize for risk and capital efficiency for Karura:
Summary:
Rationale:
Since last week, KSM volatility has increased from 86% to 98% and the $ADV decreased from $30.7M to $28.6M. The kUSD minted decreased from $9.0M to $8.9M. The Value at Risk increased from $0.30M to $2.2M. Breaking down the VaR further, all of it comes from the possibility of insolvent liquidations of KSM, not KAR. Our platform's analysis shows that we can safely take a more aggressive stance with respect to KAR to raise capital efficiency while keeping risks within acceptable limits.
Dashboard:
The community should use Gauntlet’s Risk Dashboard to better understand the updated parameter suggestions and general market risk in Karura.