DeFi Lender, Aurigami Engages RiskDAO To Introduce Quality Risk Management Analysis On The Platform

Aurigami, a decentralized finance (DeFi) lending protocol, has successfully employed the services of RiskDAO, a risk management service DAO, spearheaded by B.Protocol and 1kx, to "perform a comprehensive assessment of the protocol's risk parameters". The latest move is in line with Aurigami's vision of taking a proactive approach to tackling risks on the platform and boosting its capital efficiency.

The recently completed RiskDAO risk assessment framework tested the risk management solutions on Aurigami, conducting a rigorous quantitative analysis and simulation of worst-case scenarios for the protocol. The Aurigami team states the success of the platform, showing zero value at risk even in the most stressful moments, such as the current bear market. This has been largely due to continuous risk assessment tests and building safe lending parameters that are matched to the protocol's liquidity.

Speaking on the latest "collaboration" with RiskDAO, Lucas Huang, co-founder of Aurigami said,

"Working with Risk DAO has been a breeze, and we're excited to establish continuous risk assessment with their proprietary algorithms. Thanks to our collaboration, Aurigami will continue to be one of the safest and most efficient lending markets, and we intend to keep it that way".

In brief, RiskDAO provides clients with an open-source risk assessment framework and associated audits to secure the liquidity of the platform. They base their assessments on historical data and predict the future based on current liquidity and potential market outcomes. With Aurora-based Aurigami coming into the picture, their concept of gamification of liquidity provision is set to benefit more, preventing any squeeze of liquidity for DeFi users.

Depositors on Aurigami will efficiently and securely provide liquidity and earn an income, while borrowers will be able to take out digital asset loans in an over-collerteralized fashion.

The RiskDAO risk assessment recommendations

Following a successful risk assessment and audit, RiskDAO also gave the Aurigami team a list of recommendations based on its analysis. Notably, RiskDAO recommends the introduction of borrowing and lending caps for all the supported digital assets. The collateralization ratios of certain borrowable assets will also be revised to optimal levels, allowing sophisticated users to reach even higher levels of leverage and capital efficiency with the platform.

Additionally, Origami and RiskDAO will continue working together to ensure all future kinds of risks are analysed before they impact the liquidity on the platform. Armed with a real-time analytics dashboard to monitor risk-related KPIs, built by Risk DAO in collaboration with Kyberswap, Aurigami will be able to quickly respond to changing liquidity environments.

Finally, having risk management solutions across DeFi platforms is key to avoiding cases such as the Luna debacle where investors effectively lost all their investments. To this end, Origami is making risk management "one of its highest priorities", and the results already show, with the platform having zero bad debt and zero insolvent accounts, as tracked by Risk DAO's Bad Debt Dashboard which compares users' risks across leading DeFi lending platforms.