Author: IntoTheBlock Research
May 31, 2023
Summary
IntoTheBlock (ITB) is requesting a grant to build the following set of risk management solutions for Frax Lend and its community:
- An open dashboard monitoring general and pool-specific risk indicators
- CSV downloads of underlying data for all indicators
- API access for core contributors to access data
- Documentation covering Frax Lend’s risk dynamics
The dashboard would be hosted on ITB’s risk radar product (currently the Alpha phase is available here) and also as a section within the FraxFacts site. Each indicator’s data would be openly available for Frax users to keep track of and mitigate economic risks. These metrics are particularly relevant to attract institutional investors and are based on ITB’s experience managing risks on nine figures for some of crypto’s largest balance sheets.
On a quarterly basis IntoTheBlock’s team would add support for more pools added to Frax Lend and update metrics accordingly.
Abstract
IntoTheBlock has been deeply involved in DeFi over the past two years. This began with the launch of DeFi Insights analytics and grew substantially through its institutional quantitative strategies (ITB Quant) service. ITB’s DeFi Quant Platform serves as the gateway used by over 20 of the largest crypto institutions to access DeFi yields via sophisticated quantitative strategies with corresponding risk management models.
To help streamline institutional adoption of DeFi, IntoTheBlock decided to enable access to its risk indicators and models via APIs and analytics dashboards. The objective of this proposal is to build these risk models and have them openly available for Frax Lend’s institutional and retail investors.
Motivation
Risk monitoring and management is paramount for any financial service. The recent events in the DeFi market have proven that risk management is essential to catalyze the growth of the space. At ITB we believe that risk management in DeFi should be done out in the open, following crypto’s ethos, and not be a luxury expense.
Following ITB’s experience safeguarding hundreds of millions into DeFi through advanced risk management models, we believe that expanding these tools and offering them to Frax Lend would help make DeFi safer over the mid- to long-term. Enabling real time economic risk monitoring for Frax Lend should be an important element to provide confidence to institutional and retail investors.
Specification & Implementation
IntoTheBlock is requesting $60,000 to build near real-time economic risk monitoring and analytics for the Frax Lend protocol. Specifically, the grant will cover the following deliverables:
- Economic Risk API: REST API enabling access to dozens of economic risk indicators in the Frax Lend protocol.
- Economic Risk Dashboard: Web interface that includes visualizations of the most important risk indicators.
- Documentation: Complete documentation of all risk indicators included in the release.
These deliverables will be split into three main milestones, requesting $15k to be paid upon completion of each plus $15k upfront and a $15k annual maintenance fee.
Frax Lend ITB Grant Milestones & Payments:
- Upfront payment ($15k)
- Indicators 1-6 (dashboard + API) ($15k)
- Indicators 7-11 (dashboard + API) ($15k)
- Documentation covering Frax Lend’s risk dynamics and indicators ($15k)
This release will include the risk indicators outlined in this document for the 15 assets supported as collateral on the Frax Lend protocol at the time of writing. The following Figma mock-ups made by ITB’s design team demonstrates how the proposed layout would look like within the ITB risk product and on the Frax Facts platform. (Keep in mind that this does not yet include live data from protocol and is just for reference).
These indicators are subject to modification based on feedback from the community and Frax Lend’s team. The ITB team is committed to upgrading these indicators as Frax Lend expands and to incorporate the community’s feedback to make these risk tools more useful over time. For this ongoing maintenance, ITB requests an additional $15k fee annually.
Conclusion
IntoTheBlock’s proposal looks to enable real time economic risk monitoring for the Frax Lend protocol. The risk indicators included in this proposal are based on IntoTheBlock’s experience managing and monitoring risk for Frax Lend and similar protocols. The initial release is an attempt to democratize access to sophisticated risk models for all investors participating in the Frax Lend protocol.