Gauntlet makes the following recommendations to optimize risk and capital efficiency for Acala and Karura:
We have ingested the new Acala assets into our simulations, so we can report on their status alongside the existing Karura assets.
Since our last recommendations, VaR has decreased from $827k to $694k. All of the VaR comes from two assets: LKSM and LCDOT. LKSM's VaR has decreased from $827k to $565k. LCDOT has a VaR of $98k. The other assets (KSM, KAR, DOT, ACA) all currently have VaR of $0.
Now that we have simulations of Acala assets, Gauntlet's models can elucidate which assets present the most market risk to Acala. DOT and ACA both show low insolvency risk and so can accommodate lower liquidation thresholds. LCDOT is relatively riskier, so a higher liquidation threshold can mitigate risk to the protocol. LKSM remains risky, so we recommend continuing to increase its liquidation threshold to further reduce insolvency risk.
The community should use Gauntlet's Risk Dashboard to understand better the updated parameter suggestions and general market risk in Acala.
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Gauntlet has made some recommendations to improve the risk and capital efficiency of Acala and Karura. They suggest increasing the liquidation ratio for LKSM and LCDOT and decreasing it for ACA and DOT. Gauntlet's simulations show that LKSM and LCDOT have the highest market risk, while DOT and ACA have low insolvency risk. The community can use Gauntlet's Risk Dashboard to understand these recommendations and market risk in Acala.
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