Risk Mitigation Measures

Collateral Price Volatility StaikaFi Protocol manages collateral price volatility by implementing conservative debt ceilings, setting appropriate liquidation ratios and penalties, accepting collateral types whose underlying tokens have sufficient liquidity, and restricting tokens to those from trusted protocols vetted by StaikaFi governance.

Liquidation Risk To mitigate liquidation risk, StaikaFi Protocol employs efficient liquidation mechanisms, enforces conservative liquidation ratios and penalties, offers clear risk management guidelines, and maintains a robust monitoring system to identify and address potential liquidation events.

Oracle Risk StaikaFi Protocol addresses oracle risk by integrating oracles from reputable providers, implementing a calculated ratio price oracle for LST to minimize price manipulation, and closely working with DEX providers to accurately estimate the value of Liquidity Pool (LP) tokens accepted as collateral in the protocol using reputable oracle providers for estimating the value of the underlying tokens in the LP.

Inter-Protocol Risk Risk between protocols is mitigated by StaikaFi Protocol through rigorous due diligence when forming partnerships and collaborations, conducting thorough audits of third-party protocols, and closely monitoring the performance and security of integrated protocols.

Stablecoin Depeg To manage the depeg risk of the stablecoin, StaikaFi Protocol implements a peg stability module, which actively maintains the stability of the stablecoin’s peg by adjusting borrowing rates, providing borrowing incentives, and employing mechanisms to stabilize and defend the peg.

Reserve Pool To mitigate the potential risk of bad debt, the protocol uses a reserve pool funded by a percentage of the borrowing interest fees accumulated by the protocol. This percentage of the fee is directed into the reserve pool, allowing it to accumulate reserves over time. By building up these reserves, StaikaFi Protocol aims to protect against instances of bad debt, ensuring the stability and sustainability of the lending and borrowing activities within the platform.

Smart Contract Risk StaikaFi Protocol mitigates smart contract risk by subjecting its smart contracts to comprehensive audits conducted by reputable firms, offering bug bounties to incentivize vulnerability reporting, and continuously monitoring and updating the smart contracts based on the findings.

Macroeconomic Risk To address macroeconomic risks, StaikaFi Protocol closely monitors macroeconomic conditions, adapts borrowing rates to mitigate potential impacts, and maintains a proactive approach to managing risks associated with inflation, central bank policies, and macroeconomic fluctuations.

Regulatory and Compliance Risks Operating from StaikaFi, Switzerland, StaikaFi Protocol benefits from a jurisdiction with low political uncertainty and a clear regulatory framework for the crypto industry.