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Risk Class Mechanism
Diamond Risk Class for a yield-generating vault could be measured by several factors, including:
- 1.Strategy risk
- 2.Protocol risk
- 3.Bridge risk
- 4.Pool asset risk
- 5.Diversity of protocols and chains
- 6.Overall level of market neutrality
Together, these factors can provide a comprehensive measure of the risk associated with a particular yield-generating vault, allowing farmers to make informed decisions that align with their individual risk tolerance and farming objectives.
Based on the risk ratings assigned to each metric, the total Diamond Risk class can be determined as follows:
By averaging the ratings assigned to each metric, the total Diamond Risk class for hodlify can be determined. For example, if the average rating falls within the A range (8.5-10), hodlify would be classified as having the safest Diamond Risk.