Gauntlet makes the following recommendations to optimize risk and capital efficiency for Karura:
Karura Recommendations:
- We recommend lowering KSM’s minimum collateral ratio from 1.6 to 1.5.
Rationale:
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.
Dashboard:
The community should use Gauntlet’s Risk Dashboard to understand better the updated parameter suggestions and general market risk in Karura.