gro Docs
Risk Balancer
Decentralised Deposit Protection
The Risk Balancer is a module that autonomously balances a portfolio of assets to enable tranching of smart contract and stablecoin risks. It is the technological innovation powering Gro protocol and enabling the two products; PWRD stablecoin and Vault.
Risk Balancer provides Gro protocol with a systemic view of protocol and stablecoin exposure throughout layers of nested protocols (money legos interacting with each other) and stablecoins (compounding risk through AMMs).
Risk Balancer integrates with Gro protocol's deposit and withdrawal mechanisms to enable decentralised and user driven portfolio rebalancing. This allows the protocol to autonomously maintain a balanced exposure, spreading risk between tried-and-tested stablecoins and protocols.
Risk Balancer is also a risk-tranching mechanism. Thanks to the balanced portfolio and the compartmentalisation of assets into several protocols with low correlation, risk can be tranched into a high and a low risk tranche. Unlike other risk tranching platforms that tranche yield, Risk Balancer can also tranche long-tail risks like stablecoin and smart contract failures. Risk-tolerant users can then get higher yields, while risk-averse users enjoy protection in exchange for sharing profits with their risk-tolerant counterparts.
The above enables Gro Protocol to offer a pairing of complementary products with distinct risk/return profile; PWRD Stablecoin and Vault.
For more details about Gro Protocol's allocation to various yield strategies, please see our dApp's System Allocation charts on the dashboard.
Protocol capital allocation as at 30th November 2021

Reminder about Risk

DeFi is still a very new space, and while that's exciting, it comes with risk. Gro Protocol's software helps you access this world, but make sure you do your own research and only supply assets you can afford to lose.
Last modified 1mo ago
Copy link