Gauntlet makes the following recommendations to optimize risk and capital efficiency for Karura:
Rationale: Since our last recommendations, Value at Risk (VaR) has remained at $1.7M. KAR’s VaR fell from $272k to $233k, while LKSM’s VaR rose from $1.4M to $1.5M. KSM’s VaR remains close to $0 despite having lowered its liquidation ratio twice last month. We recommend lowering the KSM collateral ratio so that users can mint more KSM-backed aUSD, which our simulations show has a low likelihood of increasing insolvency potential.
The community should use Gauntlet’s Risk Dashboard to understand better the updated parameter suggestions and general market risk in Karura.
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