Overview of Reflect(s) Risk.
This page provides overview level descriptions of various forms of risk and methods of dealing with this within the reflect.money ecosystem.
Types of risk facing digital financial products.
Be Aware | When utilizing financial primitives online, it is paramount to be comfortable with personal management of operational and economic security and understand all of the risks associated with such a product. If you are unsure or uncertain in any way in how to approach reflect assets then please consult with your financial advisor.
Smart Contract Risk
the public & permissionless nature of smart contracts means they are often targets of cyber theft. This is an inherent risk when depositing funds on a public blockchain.
Prevention of Risk: Code & Economic Audits
Elimination of Risk: Global Insurance
Exchange Risk
Reflect utilizes on-chain DEX’s to enable some of its strategy backed products to be capitally efficient, this means onboarding all of the risks associated with these exchanges.
Prevention of Risk: Use of Insured DEXs
Elimination of Risk: Global Insurance
Interest Rate Risk
Although reflect(s) insurance systems cover 100% all of principal deposits the rates provided by each strategy are not guaranteed and have their own inherent risks such as money market fund rate changes, funding rate swings etc.
Prevention of Risk: Economic Strategy Audits
Elimination of Risk: Fallbacks in Strategies
Collateral Risk
Reflect utilises assets issued on-chain as collateral for its strategies and therefore inherents risks associated with centralised and decentralised issuers of tokens.
Prevention of Risk: Asset Classification
Elimination of Risk: Limitation to S Tier
Key knowledge for understanding the reflect risk framework.
The reflect risk framework is a four-step solution for ensuring S-Tier collateral assets issued on-chain can be deployed to the most secure and effective financial strategy while simulteanously being tokenised as stablecoins through intermediation.
Asset Classification
A systematic approach to defining the validity of an asset for use as collateral in reflect(s) issuing strategies.
Economic Security Audits (ESA)
Academic thesis driven simulation, backtesting and scrutiny of strategies implemented for the creation of new stablecoins.
Code Security Audits (CSA)
Rigorous exploitation, penetration and security-practice audits from reputable third-party research vendors.
Global Insurance
A first-in-industry autonomous insurance protocol powered by consensus networks and restaking pools.
Active risk prevention through consensus based insurance
Reflect Money actively prevents risk events facing its collateral via autonomous consensus - this can otherwise be described as groups of authorized nodes who are operating a software-based data collection service that aids in identifying the moments an insurance claim is needed. Once these nodes agree that a claim is required they can automatically run this process on-chain, ensuring minimal collateral downtime and the smallest possible losses.
Global Insurance (How it Works) -
Powered by Restaking
Reflect(s) Global Insurance pool is powered by Restaked Assets. Allowing users to secure their Layer-1 blockchain by staking & earn real-time cash income by securing stablecoins.
Automated by Consensus
To maximise transparency and minimise insurance pool losses all claims are handled through consensus nodes with access to all data relevant to Reflect strategies.
Attestations in Real Time
Insurance nodes post public attestations every 450 miliseconds of all data they have collected and the calculated risk score and claims status. This allows for developers and users to model risk in realtime.