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Risk Engine

The Risk Engine is a component of the Theo Network node responsible for managing risk associated with trading strategies, especially those involving perpetuals trading or lending venues where liquidation may otherwise occur.

Sample risk parameters are provided below. Note that these parameters are subject to change and may vary across trading strategies.

Type
Collateral
Loan Token
Parameter
Venue Limit
TARGET
MAX

Lending

ETH, BTC, SOL, mETH

USDC, USDT

LTV

~80%

40%

60%

Perp

ETH, BTC, SOL

N/A

Multiplier

10x

2.5x

4x

Mechanism

The Risk Engine continuously polls risk parameters for all positions on trading and lending venues. When a position reaches the MAX value, the Theo node attempts to establish next-block consensus with other nodes before including this information in the block.

Immediately after the block is finalized, the Execution Engine will be prompted to rebalance collateral to reduce leverage to the TARGET value.

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Last updated 22 days ago