Risk Framework
Exceed employs a multi-layered risk framework designed for institutional-grade capital management. Every allocation decision incorporates drawdown scenarios, concentration limits, and liquidation buffers.
Drawdown Modeling
The engine models severe market drawdowns for each asset class to ensure positions survive extreme conditions:
| Asset | Modeled Drawdown | Basis |
|---|---|---|
| SOL | 35% | Historical worst-case scenario |
| BTC | 25% | Historical worst-case scenario |
| ETH | 30% | Historical worst-case scenario |
| Stablecoins | 5% | Depeg scenario |
These drawdowns are used to calculate effective LTV — the actual borrowing power used by the engine, which is always more conservative than the protocol’s maximum LTV.
Effective LTV Calculation
Correlated Pairs (Same Asset Group)
When collateral and borrowed asset move together (e.g., dfdvSOL collateral, SOL borrow), the engine applies a small buffer to the maximum LTV. This accounts for the possibility of temporary LST depeg or price feed lag.
Uncorrelated Pairs (Cross-Group)
When collateral and borrowed asset are in different groups (e.g., dfdvSOL collateral, USDC borrow), the full drawdown scenario is applied to the maximum LTV. This ensures the position remains solvent even in the modeled worst-case scenario.
Concentration Limits
No single strategy, protocol, or asset dominates the portfolio. Per-strategy and per-protocol caps are enforced, and assets are grouped by correlation to prevent overexposure within a single risk factor.
Concentration limits are enforced at multiple stages of the allocation process to ensure no cap is exceeded.
Liquidation Buffer
For every borrowing position, the engine maintains a substantial buffer between the current LTV and the liquidation threshold. The effective LTV calculation ensures this buffer is large enough to survive the modeled drawdown scenario.
Capacity Constraints
The engine respects real-world liquidity and capacity limits:
- Pool liquidity — Cannot borrow more than available liquidity
- Utilization caps — Respects protocol-level utilization limits
- Open interest limits — Trading strategies are capped relative to market open interest
- Order book depth — Fixed-rate strategies are limited by available depth
Credit Risk
Institutional credit products carry counterparty risk separate from smart contract risk:
| Product | Risk Type | Mitigation |
|---|---|---|
| PRIME | U.S. HELOC lending | Regulated issuer (Figure Markets), diversified loan book |
| ONYC | Private credit | Concentration limits, monitored performance |
| syrupUSDC | Institutional credit | Maple Finance oversight, diversified borrowers |
| PST | Receivables | Short-duration assets, regular turnover |
Credit products are classified as RWA (Real World Assets) and can be excluded via the No-RWA risk profile.
Operational Security
Custody
All on-chain operations are executed through a ForDefi MPC wallet — no single key can authorize transactions.
Monitoring
Hypernative provides real-time monitoring and alerting for anomalous on-chain activity, exploit detection, and position health.
Manual Rebalancing
All rebalances are reviewed by the operations team before execution. The engine generates recommendations — humans approve and execute.