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Methodology

Risk reports are conducted by the Prisma independent risk and research team operated by Llama Risk as part of a series on LST collateral risk assessments.
These reports will comprehensively cover all relevant risk factors of a specific collateral. The Prisma Risk Team approach involves both quantitative and qualitative analysis to help determine whether the collateral can be safely onboarded and to what extent there should be restrictions on the protocol’s exposure to the collateral.
As Prisma will be onboarding a variety of LSTs as collateral, these reviews involve comparative analysis to determine suitability as collateral. Risks are categorized into:
  • Market Risk - risks related to market liquidity and volatility
  • Technology Risk - risks related to smart contracts, dependencies, and oracle price feeds
  • Counterparty Risk - risks related to governance, centralization vectors, and legal/regulatory considerations