Gauntlet Risk Parameter Recommendation (4/28/2022)

Gauntlet makes the following recommendations to optimize risk and capital efficiency for Karura:

Karura Recommendations:

  • We recommend lowering KSM’s minimum collateral ratio from 1.6 to 1.5.


Since our last recommendations, VaR has decreased from $3.0M to $2.8M. KAR’s VaR has decreased from $1.4M to $1.1M, while LKSM’s VaR has remained flat at $1.6M. KSM’s VaR rose slightly from $5k to $6k. With KSM’s VaR remaining so close to zero, our simulation engine shows that the capital efficiency gain by allowing users to take on KSM debt at a lower ratio more than offsets the slight increase in market risk.


The community should use Gauntlet’s Risk Dashboard to understand better the updated parameter suggestions and general market risk in Karura.


It might be wise to delay this until after the May 15th unlocks. There is the potential for a temporary dip in price when ~1.1M KSM are released back into circulation.


Thanks for the suggestion. This is the onchain proposal: Gauntlet Risk Parameter Recommendation (4/28/2022)

@bacchist we still have 2 weeks until the unlock and we reassess the risk parameters every week so it should be safe to apply this change.

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