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Complete Guide to Risk on Yearn
WIP Doc LInk: https://hackmd.io/zVuiOwTBTZGT4Z8yV2ZQTw
Wot_Is_Goin_On Oct 15 at 8:54 PM Hi again @arcturus_ (or anyone else smile) if you would like to review any of the work so far then the following are good to go (they're in order so can review up to Regulatory risks). Up to you how you want to make comments, e.g. directly in the document, or in a separate doc or here. Look forward to your feedback. Key Risks Operational Risks Market Risks Digital Assets Ecosystem Smart contract risk Adoption risks Regulatory risks
Great stuff. There could be two more sections, not very technical but pertinent.
Financial risks Strategic risks
Left a comment about maybe having a hierarchy. Let me know what you think.
Left a comment about maybe having a hierarchy. Let me know what you think.
Thanks for review. Definitely need this.
I just went ahead and added the hierarchy to the start, since I'm sure it will prove useful.
Also I've started a deep dive on some of these risks, and my first impression is some of the risks need more explicit definitions to really be considered risks. Risks like "low yields" are sort-of implicit and are generally tackled by strategists, not risk management.
Finally, some of the risk mitigations here are just bull theses, like "the chances of this risk taking place are diminished because of this bull case A or bull case B". A bull thesis isn't risk mitigation, it's basically just a hope that things will not turn sour. Will reiterate here what I commented within, and that's that risk management isn't about justifying why a bad scenario won't happen, it's about preparing for that scenario through measures.
Thanks for the comments.
The work so far is based on the spreadsheet below where I wanted to analyse identification, measurement, managing, monitoring and reporting of all the risks. I thought a real-time risk metrics dashboard would be quite useful as for many risks it's only once we have assessed them that we can start to manage them. https://docs.google.com/spreadsheets/d/1-lPMpgeagWE7f1zMPN7PAAgSqXmj2VRnn4g8H4wq7pQ/edit#gid=0
Some risks Yearn may just have to accept as there may be little that can be done from Yearn's perspective, e.g. the possible "low yield" environment.
I didn't like the sub-title "risk mitigation" for all of them either but I kept it for consistency for this draft. I agree some are not risk mitigation and could be better labelled as "Reasons why risk may not crystallize" so we can change this. I started off thinking of only considering downside risks (as per usual risk management) but there isn't a lot of documentation available on the positive side of the distribution either and I think it's educational (which is why some ended up looking like bull cases) and fits in nicely with the risk identified.
In terms of active risk management, I agree, and that's where I wanted this to get there eventually. I don't see this solely as a documentation exercise but wanted to get buy-in for active risk management first. We can't claim that we are actively managing certain risks when in reality it was just me writing a document without talking to the devs on how things work in practice. The goal of the document was to be able to go back to the community and say "We've analysed these risks and believe if we did x, y and z then Yearn could be de-risked", but when I looked at the work being done by the team I realised we're already doing a lot of it (but the information was scattered around Andre Cronje podcasts, Banteg's twitter, the newsletter etc) so it made more sense to document what is already being done about the risks.
That makes sense. I just redid the Operational Risk section in a format that communicates things a bit more concisely, added sections for potential risk management strategies, and follows the key risk hierarchy. Can continue applying that same approach for the rest of the document, if you agree with the changes.
That makes sense. I just redid the Operational Risk section in a format that communicates things a bit more concisely, added sections for potential risk management strategies, and follows the key risk hierarchy. Can continue applying that same approach for the rest of the document, if you agree with the changes.
Hi @Skelectric - apologies for late reply - life got in the way. Agree with communicating things more concisely. I've realised that risk documentation is more work than I can do on my own and will need regular monitoring so if this is something you're interested in helping out on please DM me on Twitter @Wot-Is-Goin-On or on Telegram (Wot_Is Goin_On). I think we can review what we have and update it so it's ready to go on Yearn docs sooner with better communication. I would also like to develop a process for risk management and come up with a means of assessing materiality which your CERA qualification will help with ;-)
recent risk doc as reference, haven't read https://docs.futureswap.com/protocol/liquidity