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BendDAO's Risk Framework
With billions of locked assets, Decentralized Finance (DeFi) and Non-Fungible Token (NFT) has boomed in recent years. Bend Protocol launched on Ethereum mainnet in January 2022, is now among the top NFT lending markets for depositors and borrowers.
The industry has been forming industry standards to manage the risks emerging from the hyper-connected ecosystem. Bend holds security at its core with audits by CertiK as detailed in Security & Audits.
The following documentation analyses the fundamental risks of the protocol and describes the processes in place to mitigate them.
The BendDAO Market Risk Assessment, has been produced by the quantitative modeling team of BendDAO. BendDAO and the Safety Module have been stress tested via agent-based simulation. The simulations show the model is currently able to remain solvent under extreme market conditions, showing appropriate risk management. As a result, Bend provided some parameter suggestions to further reduce the risk of insolvency.
BendDAO's risk management mechanism refers to AAVE's risk framework in some aspects, thanks to AAVE!