List Solity Network as the first external Risk Model Provider [SIP - 1.37]

Summary :bookmark_tabs:

Allow Solity Network to add risk models as a new Risk Model Provider within the Spool protocol.

Proposal :mailbox:

Solity Network aims to be the underlying infrastructure for Decentralized Finance (DeFi) by enabling real-time processing of fundamental risk across chains, protocols, and liquidity pools. By aggregating multi-chain risk parameters, Solity Network creates transparency, sets the stage for machine learning, and allows the implementation of accurate risk/reward strategies for DeFi protocols. For more information, visit their website.

As a Risk Model Provider, Solity Network will provide a dedicated risk framework for Spool. The risk model will cover the following dimensions:

  • Development activity
  • Social activity
  • Security
  • Liquidity
  • Decentralization
  • Tokenomics

For more details on the risk dimensions and underlying metrics, see the information below in the specifications.

As a vetted Risk Model Provider, Solity Network may benefit from performance fees. Through the mechanisms of the Spool protocol, the Risk Model provider’s proposed performance fee will be set not higher than 5% (Risk Model Providers - Spool Tech Docs).

Motivation :fire:

Solity Network’s motivation is to become the first accredited external Risk Model Provider for Spool. Since their vision is to become the overarching risk layer for DAOs and dApps, the teams of Solity and Spool believe that Solity aligns very well with Spool’s mission.

Vote :ballot_box:

With “Yes” you vote to list Solity Network as Risk Model Provider, with “No” you vote against listing Solity Network as Risk Model Provider.

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The vote takes place here
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The original proposal and initial discussions can be found here.

Timeline :clock130:

2023-05-30T22:00:00Z2023-06-05T13:00:00Z

Specifications on risk dimensions

1. Development activity
The development activity score consists of the following sub-elements and parameters:

  • Contribution: Number of commits, pull requests, and issues created by developers
  • Engagement: Developer engagement with the community when interacting on issues
  • Documentation: Quality of repo documentation and code as well as number of comments on commits
  • Developer dependency: Distribution of individual developer contribution

2. Social activity
The social activity score consists of the following sub-elements and parameters:

  • Telegram: The score includes total and daily messages of the channel, total and online member count of the channel, score on sentiment model, among others
  • Discord: The score for a given day includes the total and active member count, total message count, total unique user count, user-message frequency, word frequency, average sentiment score in a given day, among others
  • Reddit: The score includes data on reddit channel (e.g., daily total subscribers, daily active subscribers, moderator count), reddit posts (e.g., daily upvotes, downvotes, comments, awards, average sentiment on given day), as well as a sentiment score

3. Security
The security score consists of the following elements: Smart contract deployment date in combination with TVL, audit information including who audited the smart contracts, upgradability, static analyses, bounty size, existence of whitepaper, team data, number of hacks, and smart contract statistics.

4. Decentralization
The decentralization score is measured based on the number of tokens, token holders, tokens per wallet, wallet ages, network participation, governance parameters (e.g., democracy indicator) as well as distribution (e.g., Gini coefficient).

5. Liquidity
The methodology for the liquidity score depends on the protocol type. We differentiate hereby between lending protocols, decentralized exchanges, and yield aggregators/optimizers:

  • Lending protocols: Specifically, we take into account the overall health factor of the protocol, top wallets and assets, top added/removed liquidity for lending pools, total liquidity, daily volume, token price, collateral value, health factor of debt, liquidity rate/depth, the number of active borrowers and lenders, and the number of unique addresses interacting with the protocol
  • Decentralized exchanges: Specifically, we take into account the market efficiency of decentralized exchanges, correlation of underlying assets, liquidity concentration, volume and the assessment of TVL
  • Yield aggregators/optimizers: We take into account capitalization factors for the respective protocol

6. Tokenomics
The tokenomics score takes into account risk concerning price manipulation, market positioning, block producer, token circulation, token value stability, token economics, token utility, token distribution, and token liquidity.

The vote concluded with “Yes”!

Great to have you on board for increasing the depth of Spools infrastructure Solity Network! :tada:

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