- YES, I have read and understand the CONFLUX ECOSYSTEM GRANTS OVERVIEW and confirm that my proposal is suitable for the Growth Grants stream.
- YES, I understand that the Conflux Growth Grants are subject to a No Sale Rule and have read its terms.
- YES, I acknowledge that I will be required to provide additional KYC information to the Conflux Foundation to receive this grant.
- YES, I understand and agree to follow public grant reporting requirements.
DeRisk is another venture lead by the team of the successful project Carmine Finance, a project taking care of DeFi risks, including an Automated Market Maker enabling anyone to buy and sell options at a fair price (mostly traders, liquidity providers and Hedge Funds and investors) or insurance against crypto price drops.
DeRisk itself was conceptualized to address the inherent risks in the DeFi lending sector. As an open-source platform, DeRisk focuses on monitoring and forecasting the risk of loans, primarily those at risk of going under the water, to protect lending protocols and their users. By providing an “early warning” system, DeRisk aims to enhance capital efficiency and security within the DeFi ecosystem.
DeRisk operates on the principle of integrating with lending protocols and AMMs analyzing loans against available capital and liquidity risks. The platform has been developed with a keen understanding of the volatility in the crypto market and the need for efficient capital allocation.
The goal of DeRisk is to provide a robust and scalable solution that reduces the chances of bad debt accumulation in the ecosystem, improves the confidence of users in lending protocols, and encourages more capital flow, thereby enhancing the overall health of the DeFi ecosystem. Furthermore, thanks to the increased transparency, the lending protocol could be more open to adding mid to mid-low level tokens.
Team Leader: Marek Hauzr (LinkedIn) with extensive experience in Finance, HFT, AI/ML, MEV. Responsible for project management and strategic direction.
Team members: Ondrej (LinkedIn), Andrej (LinkedIn), David (LinkedIn), and Guillermo (LinkedIn) with diverse expertise in development, finance, and blockchain technology, contributing to various aspects of DeRisk’s development and operations (more in the Team section in Carmine Finance webpage)
TOTAL BUDGET AND FUNDING TIER
Grant Tier: Tier 3
Grant Size: $36,000
- $5k - Environment setup and customisation of current infrastructure
- $20k - Integration of Lending Protocols
- $6k - Integration of AMMs
- $5k - Visualization (FrontEnd)
DeRisk currently has a working version built on StarkNet. Official release is planned for mid December. It is capable of monitoring lending protocols, comparing loans against available capital on DEXes and liquidators’ smart contracts, and detecting loans with higher risk.
To illustrate that in practice, consider Lending Protocol A and Lending Protocol B that have lent ~$5 mil. worth of tokens while available capital on DEXes is just above $15 mil. This situation poses a considerable risk not only to that protocol, but to other lending protocols and the broader DeFi ecosystem.
With DeRisk implemented, the 2 lending protocols would know of such a situation while it’s brewing, providing some previous time to react. They could:
- Stop issuing loans that have too much risk, or adjust collateral needed. When they know a specific loan could go under water… They could also say ahead of time say “loans A to Z get additional incentive for liquidation” which would result in liquidators bringing more capital.
- A lot less capital needs to be in security pools of lending protocols because of understanding the risks - meaning a lot more capital in circulation on Conflux
- Be ready to buy insurance in the future (we provide the possibility of buying insurance as options as a hedge mechanism).
Additionally, DeRisk would help Conflux in more ways:
- It standardizes loan data so that it is easier for liquidators to be onboarded not only as liquidators for a single protocol but for multiple ones with low additional cost.
- It will also be possible to forecast probable arbitraging opportunities on a chain level, resulting in a higher market efficiency.
- DeRisk will also contain analytics and insights into the lending protocols and compare them between each other. Giving their users more confidence in not only lending protocols but also in Conflux.
The technical scope of DeRisk involves:
- Infrastructure setup including data collection.
- Integration with lending protocols and AMMs on Goledo, dForce, Swappi, Moon Swap, and MemeDex.
- Development of a mechanism for automated search and integration of liquidators.
- Implementation of a system for monitoring altcoins/utility tokens within the ecosystem and their liquidity risks.
- Implementation and deployment of customized frontend.
- Running the DeRisk for next 12 months.
DeRisk utilizes a combination of Python, Streamlit, PostgreSQL, and React. This technology stack ensures robust data collection, processing, and a user-friendly interface. The system model includes data collection through an indexer, data standardization, and an open API for data access. More details can be found directly on the working version built on StarkNet.
Our solution offers further synergies such as insurance against bad loans. More on that can be found in a separate Doc.
The integration and development process for DeRisk is expected to take:
- Milestone 1: Environment setup and customisation of current infrastructure (1 month)
- Milestone 2: Integration of Lending Protocols (1-2 months)
- Milestone 3: Integration of AMMs (1-2 months)
- Milestone 4: Visualization (FrontEnd) (1 month)
- Milestone 5: Running DeRisk (12 months)
DeRisk plans for maintenance include:
- Everything developed within the scope of this grant will be under a MIT license
- Continuous support and running of the DeRisk application for 12 months.
- Providing basic updates to the protocols as required.
- Adding more lending protocols is complex and we would apply for an additional grant