Risk Models in Yelay

Understanding Risk Models

Risk Models are essential components of the Yelay ecosystem that provide a quantitative method for assessing strategy and protocol risks. These models translate various risk factors into a comprehensive Risk Score, enabling users to make informed decisions.

How Risk Models Work

Each Risk Model evaluates strategies and protocols using specific input variables such as:

  • Total Value Locked (TVL)

  • Time deployed

  • Annual Percentage Yield (APY)

  • Protocol-specific metrics

Risk Model Governance

The Yelay ecosystem maintains an open and decentralized approach to Risk Models:

  1. Anyone can create and submit Risk Models for consideration

  2. All proposed models must be approved through DAO voting

  3. Risk Model Providers must stake YLAY tokens, ensuring their incentives align with the ecosystem's best interests

  4. Users can select approved Risk Models that best match their risk management preferences

Available Risk Models

Genesis Risk Model

The Genesis Risk Model, developed by Yelay, was the first Risk Model implemented in the ecosystem. It evaluates protocols based on seven key parameters:

  1. "Risk-Free" annual percentage yield

  2. Current protocol APY

  3. Audit status and quality

  4. Bug bounty programs

  5. Time since deployment

  6. Protocol Total Value Locked (TVL)

  7. Smart contract complexity ("Depth of Smart Contracts")

The model calculates Risk Scores by analyzing the relative differences between protocols across these parameters.

De.Fi Risk Model

De.Fi is a partnered Risk Model Provider specializing in Smart Contract Risk assessment. Their model:

  • Analyzes smart contract security factors ,including:

    • Contract upgradeability

    • Deployment duration

    • Known vulnerabilities

  • Provides risk assessments on a 0-100 scale (where 100 represents maximum safety)

  • Adapts to Yelay's risk grading system through score inversion and scaling:

    • Original De.Fi score: 0 (high risk) to 100 (safe)

    • Converted Yelay score: 0 (safe) to 10 (high risk)

All De.Fi risk assessments can be viewed at de.fi/scanner, including protocols beyond those integrated with Yelay.

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