DeFi Risk Management
DraftStatus: Draft Version: 0.1.0 Last Updated: 2026-05-16 Owner: Axodus DeFi
Purpose
DeFi risk management identifies, measures, limits, monitors, discloses, and reports risks across contracts, protocols, markets, liquidity, governance, treasury, users, and external dependencies.
Risk Categories
Risk categories include smart contract risk, protocol risk, market risk, liquidity risk, oracle risk, bridge risk, composability risk, governance risk, custody risk, slippage risk, impermanent loss, yield variability, lockup risk, regulatory uncertainty, and user-understanding risk.
Controls
Controls include smart contract review, protocol due diligence, exposure limits, liquidity controls, oracle controls, governance controls, treasury controls, disclosures, Academy modules, risk acknowledgements, conservative defaults, reporting, and incident response.
Risk Levels
| Level | Examples | Controls |
|---|---|---|
| Low | Educational content, non-custodial information | Basic disclosure |
| Medium | Simple staking interface, protocol dashboard | Disclosure, protocol review, monitoring |
| High | Vault, liquidity strategy, treasury allocation, protocol integration | Security review, governance review, risk limits, reporting |
| Critical | Derivatives, debentures, bridge-dependent strategy, large allocation | Formal governance, security or audit review, treasury review, legal review if needed, receipts |
Risk Review Record
A risk review should include product or strategy, level, categories, affected assets, affected users or treasury, protocols, controls, residual risk, required reviews, decision, reviewer, review date, and next review.