Solistic Shield
Solistic Finance implements a robust risk management strategy that includes an Stability fund and a substantial risk pool reserve. This approach adds an additional layer of safety for users, setting Solistic apart in the DeFi lending landscape.
Solistic Shield Stability Fund
Overview
Solistic Finance is committed to building a safety net for its users. The Stability fund is designed to safeguard user assets and provide compensation in the event of unforeseen circumstances.
Funding Mechanism
5% of all fees collected by the Solistic Finance protocol are allocated to the stability fund. This consistent contribution ensures that the fund grows over time, proportional to the platform's usage and success.
Purpose and Utilisation
The primary purpose of the stability fund is to address and mitigate risks within the protocol, with a specific focus on handling negative debt scenarios. The Stability Fund can be utilised in various scenarios, including:
Repaying any negative debt in the protocol
Compensating users affected by smart contract vulnerabilities
Mitigating losses from system failures
Protecting users from financial harm during extreme market events leading to undercollateralized positions
Solistic Shield Assets
The Solistic Shield Fund is comprised of SOL, ETH, BTC, USDT, and USDC. Asset allocation is as follows:
| Asset Type | % of asset |
|---|---|
SOL | 15 |
BTC | 25 |
ETH | 5 |
USDT | 35 |
USDC | 20 |
Risk Pool Reserve
In addition to the Solistic Shield , Solistic Finance has established a substantial risk pool reserve consisting of 40,000,000 SLS tokens. This reserve serves as an additional buffer against potential losses and market volatility.
Combined Risk Management Strategy
The combination of the Stability Fund and the risk pool reserve creates a multi-layered approach to risk management:
First Line of Defence: The dynamic interest rates, adaptive liquidation thresholds, and isolated lending markets serve as the first line of defense against potential losses.
Second Line of Defence: The Stability Fund, continuously growing from protocol fees, provides a liquid reserve to address immediate issues, repay negative debt, and compensate users if necessary.
Third Line of Defence: The substantial SLS token risk pool reserve acts as a long-term backstop, providing additional assurance and stability to the protocol.
Transparency and Reporting
To maintain trust and accountability, regular reports on the Fund's status, including its total value and asset allocation, will be made available to the Solistic community.
Solistic Finance's comprehensive risk management strategy, combining an Stability Fund and risk pool reserve, demonstrates a strong commitment to user protection and protocol stability. This multi-layered approach provides robust safeguards against various potential risks in the DeFi lending space.
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