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Risk Management Framework

Note, the information provided here is a basic guideline and not final.

Argo plans to allow for a variety of volatile and stable assets to back USDA. If any single collateral type is compromised, it could cause USDA to de-peg or incur bad debt for the platform. Thus, the collateral assets listed on Argo must be vetted and monitored.

Collateral Evaluation

Before listing any asset as an engine, the following will be evaluated:

  • Volatility
  • Liquidity
  • Ease of liquidation process
  • Security of asset / issuer
  • Expected engine user behavior
  • Asset parameters on other platforms

Collateral Risk Parameters

The following parameters are tuned per asset/engine type:

  • Maximum USDA borrow capacity
  • USDA borrow APY
  • Minimum collateral ratio (liquidation ratio)
  • Initial collateral ratio
  • Liquidation curve, auction parameters, and delay

The Argo protocol is more conservative with risk parameters, meaning leverage will be limited. Minimum collateral ratios for volatile assets will be set to minimize the odds of vault bankruptcy and bad debt during periods of sharp price drops.