Savvy DeFi Risk Framework

Due to the composability of the DeFi ecosystem, risks from individual components may flow into all dependent systems.

This documentation presents a framework to assess risks related to the Savvy protocol and wider ecosystem. The risk methodology considers market, counter-party, and smart contract risks and shows the overview of mitigation measures taken by the Savvy protocol.

Risks

There are four main risks associated with the usage of Savvy protocol:

Collateral Loss

Collateral loss refers to the event that a 3rd party yield strategy experiences loss of collateral due to a malfunction, breach, exploit or other malicious activity causing loss of funds.

Collateral Depeg

Collateral depeg refers to the event that one of the collateral tokens accepted by the Savvy protocol experiences a severe depegging against another form of the collateral.

svToken Depeg

svToken depeg refers to the event that the synthetic tokens issued by Savvy experiences a severe depegging against their base assets.

Contract Failure

Contract failure refers to the event that one of the Savvy smart contracts experiences a malfunction, breach, exploit or other malicious activity causing loss of funds.

Mitigation framework

Treasury multi-sig

The Savvy Treasury is managed by a multi-signature wallet to prevent unauthorized access and token loss by requiring a predefined number of signers to approve a transaction, a combination of members from the core team and the community.

Minter function revoke and Hedgey contracts

SVY token emissions are locked in over 100 immutable Hedgey contracts with the minter and admin functions revoked to prevent exploits.

Strategy due diligence

All used Strategies go though a rigorous due diligence process that considers protocol age, history, TVL, reputation, contract source code, team, line of communication and more before getting integrated into Savvy protocol.

Adapter audits

All deposit adapters for Strategies go through both internal and external audit processes to increase protection against code-related risk factors.

Contract audits

All Savvy protocol contracts has gone through rigorous audits to ensure no critical or high importance risks are present.

Deposit limits

Strategies available on Savvy protocol have deposit limits that vary by strategy and are based on multiple factors like total deposits under that strategy, liquidity in svToken pools, and market conditions.

Loan to value limits

The lines of credit have a collateralization ratio requirement of at least 200% or a maximum loan-to-value ratio (LTV) of 50%.

Emergency functions

Savvy contracts have built-in emergency functions that disables deposits and withdrawals in case of events such as collateral loss in a Strategy.

Monitoring system

Savvy utilizes multiple real-time risk monitoring systems.