Initial Recommendation for Defi.Money's $MONEY Markets
Collateral Selection and Parameterization for the $MONEY alpha deployment
Introduction
Llama Risk is excited to begin a strategic partnership with Defi.money, a chain-agnostic stablecoin protocol based on crvUSD. The alpha launch of the protocol will begin with deployments on Optimism and Arbitrum and will involve an examination of several prospective markets suitable for each chain. We will conduct simulation and empirical analysis of prospective collateral types to advise Defi.money on establishing initial markets. The analysis specifically incorporates three focus areas:
Parameterization: Using the LLAMMAsimulator tool to determine optimal parameters for select markets.
Debt Ceiling: Conducting empirical analysis of liquidity conditions for proposed initial collateral types to determine sensible debt limits for select markets.
Oracle Selection: Backtesting the performance of several oracle options to determine an optimal oracle in terms of resiliency and performance for select markets.
These analyses have been used to form initial market recommendations for the alpha launch of Defi.money. Going forward, Llama Risk will continue its engagement by developing a more sophisticated agent-based model simulation tool that can further optimize the protocol. This will become more valuable in the coming months as Defi.money seeks to add additional collateral types, with a more advanced tool helping to mitigate market risks within the specific context of the LLAMMA liquidation algorithm. For now, we present the scope and recommendations relevant to the Defi.money alpha launch.
Read the full analysis on our brand-new website at www.llamarisk.com!