Trading Strategy @TradingProtocol

The industry is waking up to the sustainability of options yield. Unlike traditional yield farming, it's more nuanced; selling vol, managing delta, hedging. If you've wanted to run options yield strategies onchain, our partners at @NautilusTrader just put together a guide that handles the hard parts: nautilustrader.io/docs/nightly/t…

Alleged Alpha Lighter vault by @allegedalpha had a blast recently. This long/short multi-strategy vault has gained 6% net (100% CAGR) over the last month. It's currently in the top 50 vaults. tradingstrategy.ai/trading-view/v…

The new Aave risk framework proposal from LlamaRisk The framework systematically quantifies and monitors risk across four layers — assets, bridges, automated oracles, and chains — to set and continuously adjust Aave's lending parameters (LTV, caps, collateral eligibility) so that protocol exposure never exceeds what on-chain evidence supports. LAYER 1: ASSET RISK - Asset classification: governance-ratified allowlist mapping, comparable asset identification - Multi-chain evaluation: bridge topology, smart contract divergence, oracle paths per chain - Smart contract audits: firm reputation, deployed version coverage, unresolved critical/high findings, incident history - Bug bounty coverage: program existence, $50k minimum payout floor, bounty-per-million-TVL scaling, scope coverage - Liquidity & market structure: secondary market depth vs largest borrower, liquidation bonus/slippage, LP diversity, venue footprint, holder concentration, peg deviation (1% over 2-day window), volume profile - Timelock requirements: timelocks on parameter changes, mint/burn authority, oracle authority, bridge authority, upgrade paths; delay sufficiency (Level 0-5) - Signing authority decentralisation: signer-set composition, quorum thresholds, identity verification, custody standards; MPC-specific: shard count/distribution, custody framework, open-source crypto library - Legal disclosures: issuer jurisdiction, redemption rights, asset-backing terms, custodian arrangements, regulatory status - Holder claims seniority: holder class identification (canonical, bridged, wrapper, custodied), seniority ordering, cross-chain symmetry - Asset backing structure: proof-of-reserves attestation, reserve composition, on-chain visibility, attestation cadence, backing-asset price observability - Issuer operational stack: hosting, key custody, incident response, change management, third-party dependencies - Incident communication: escalation paths, 24/7 reachability, pre-notification for material changes - Continuous due diligence: quarterly refresh, delta reports, per-chain coverage re-evaluation - Material change taxonomy: tracks ~30 change types including new mint/burn authorities, MPC/multisig changes, collateral type changes, oracle adapter swaps, feed swaps, rate-limit changes - Deprecation triggers: liquidity decay, oracle stability degradation, feed manipulability, thin feed conditions, Chainlink risk tier flags, backing impairment - Oracle treatment: Chainlink risk tier, internal oracle path identification, flash-loan deviation testing, exchange-rate monotonicity, single-transaction manipulation resistance LAYER 2: BRIDGING RISK - Bridge topology: origin chain, canonical supply, representation type (mint-and-burn / lock-and-mint / native), verifier configuration per route - Verifier set properties: independent verifier count, operator diversity (organizational, geographic, infrastructure), supply-chain isolation - Library & configuration: receive library pinning, upgrade path control, route topology - Bridge authority timelocks: timelocks on ownership transfer, verifier-set changes, library upgrades, rate-limit changes, mint/burn authority grants - Pause pathway: issuer-side pause, vendor halt capability, Aave-controllable pause, multi-path documentation - Bridge-layer custody: institutional-grade custody verification, key custody assessment, change pre-notification - Rate limiting: native or external rate-limiting per route, inbound/outbound limits, sizing based on highest sustained flow + headroom - Incident response: 24/7 redphone across vendors/attestors/issuers, written exploit procedures, rehearsal records - Monitoring teams: dedicated security teams for bridge stack and issuer, automated anomaly detection, pause authority - Bridge configuration lifecycle: per-lane/per-route/per-direction initial limits, comparable issuer references, adjustment documentation - Bridge stack evaluation: vendor operational security, code quality, audit reports, exploit history/recurrence, remediation quality LAYER 3: MONITORING & AUTOMATED RISK ORACLES - Continuous monitoring: authority-queue activity, governance activity, infrastructure changes, direct asset-state (bridge balance reconciliation, backing-asset state, minting/burning anomalies) - Automated Freeze Guardian triggers: backing-asset price signals, reserve composition, redemption-buffer replenishment, exchange-rate manipulation, locked-vs-minted supply mismatches, unannounced verifier/library changes - Supply/Borrow Cap Oracle triggers: secondary market thinning, holder exit velocity, cross-chain supply concentration, proportional cap adjustments - Risk Steward parameters: minDelay settings (36h for caps/rates, 72h for collateral/E-Mode, 48h for Pendle discount), maxPercentChange bounds - Umbrella coverage: unstaking cooldown sizing, freeze conditions under asset-level stress, upstream signal tracking, bad debt recognition timeline LAYER 4: CHAIN RISK - Network architecture: consensus mechanism, finality model, settlement layer, EVM divergence, audit coverage, bug bounty - Decentralisation: validator/sequencer count and identity, geographic and client diversity, staking economics, stake concentration - Finality & withdrawals: finality lag, reorg history/depth, L2 withdrawal delays, forced-inclusion/escape-hatch availability, fraud-proof/zk-proof maturity, MEV characteristics - Chain governance: upgrade authority, multisig composition/quorum, timelock delays, pause/emergency authority, governance token distribution, voting concentration - Operational history: halt/reorg incidents, post-mortems, time-to-recovery, recurrence patterns - Ecosystem adoption: aggregate TVL, stablecoin TVL/dominance, active addresses, protocol count/concentration - DeFi vertical coverage: lending, DEX, stablecoins, derivatives, oracle infrastructure gaps - Liquidity infrastructure: DEX depth on major pairs, bridge support, on/off-ramp corridors, CEX withdrawal corridors, competing lending market parameters - Tooling & monitoring: block explorer parity, indexing platform support, RPC provider diversity, risk-monitoring tooling availability - Native/major asset liquidity: native token DEX volume and price stability, major asset (ETH, BTC, stablecoins) depth, organic vs incentive-driven volume - Per-asset deployment constraints: chain-tier upper bounds on LTV, supply cap, borrow cap; cross-chain expansion constraints; quarterly tier refresh CROSS-CUTTING - Remediation timelines: 1-month implementation target, hard-block triggers for immediate review, backlog persistence tracking - Risk classification: asset-to-chain tier mapping, exposure tier constraints, parameter stack alignment, E-Mode configuration, comparable asset benchmarking

LlamaRisk @LlamaRisk

2 days ago

LlamaRisk has published an ARFC proposing a new standardized Risk Framework that governs all assets on @aave V3, V4, and Aave Horizon. The framework establishes standards for evaluating asset, bridge, and chain-level risk criteria, and for monitoring and automated risk

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GM

DomFI USDC Domination Finance vault on Base. The vault is currently yielding 1%, but was only launched couple of weeks ago. This new AMM liquidity provider vault by @dominationfi serves as the sole counterparty within Domination Finance, a perpetual futures exchange where traders take leveraged positions on dominance indices — each asset's share of total crypto market capitalisation. The protocol has three participants: traders, liquidity providers (LPs), and the oracle. Traders deposit USDC as collateral and open leveraged positions on dominance pairs. LPs deposit USDC into a shared vault that acts as the counterparty to every trade — when traders profit, the vault pays; when traders lose, the vault collects. The oracle computes dominance from weighted exchange price feeds across the top 200 cryptocurrencies and publishes verified values on-chain. Funding is a continuous per-block payment between longs and shorts. The side with more open interest pays the side with less. The rate scales with the size of the imbalance — bigger skew means higher funding. This mechanism incentivises balanced open interest and anchors perpetual prices to the oracle index. tradingstrategy.ai/trading-view/v…

@hyperbulla There is also nice arbitrage, as developers outside the US cost half as much as US salaries.

@stacy_muur Thank you for the mention @stacy_muur 🙏 Here's the live dashboard: tradingstrategy.ai/trading-view/v…

@hyperbulla Betting against Mr Trump dangerous is

Markets have been very choppy in the few months, but how about #DeFi stablecoin #vaults that have generated good returns with small drawdowns in the past three months? The Top 10 vaults show very interesting results! Check on Trading Strategy's live #dashboard: tradingstrategy.ai/trading-view/v…

DeFi yield trackers worth bookmarking ↓ → defipunkd.com → app.defi-sphere.com → risk.zyf.ai → pigi.finance → pharos.watch/yield/ → tradingstrategy.ai

@D2_Finance @arbitrum @base @HyperliquidX Insane ⭐️⭐️⭐️⭐️⭐️

Arrakis about "impermanent loss" on Hyperliquid

Arrakis @ArrakisFinance

7 days ago

x.com/i/article/2062…

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Top 20 most profitable vaults for the last month tradingstrategy.ai/trading-view/v…

Portfolio margin is technical, but simple, and it quietly decides how much capital a trading firm wastes. The most widespread approach in crypto, position-level margin, looks at each trade on its own and requires you to post collateral against each one. So a firm long BTC on one venue and short BTC perps on another, a book that's close to flat, gets charged for both legs as if they were separate bets. The better hedged you are, the more you get penalized. That's backwards. Portfolio margin fixes the lens. It stress-tests the whole book across price and volatility moves, then sizes margin to the risk that's actually left after offsetting positions cancel out. Every TradFi prime broker has margined equities this way for decades. The catch is that TradFi portfolio margin operates within a single clearinghouse, where everything nets out because it all sits in one place. Crypto has no shared clearinghouse. Your positions live across CeFi and DeFi venues that can't net what they can't see. Building one risk view across all of them is the hard part. That's what @sparkdotfi is running on @ArkisXYZ .

Spark @sparkdotfi

a week ago

A portfolio is not a collection of isolated positions. Yet much of crypto credit infrastructure still treats it that way. Institutional trading firms manage exposure across exchanges, venues, and strategies simultaneously. Evaluating each position independently can overstate

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The options market has started to price in more risk in the short term than in the medium term. This is unusual because we would expect for uncertainty to increase along with the time horizon. There is historical precedent for this, and bears are not going to like it. Given that risk is sufficiently hedged, the market usually rallies …/

KyberSwap 🤝 @o2dotapp KyberSwap has integrated o2 as a new PMM liquidity source, bringing deeper liquidity and better rates for traders. Just trade on KyberSwap.

ForgeYields USDC is currently earning 12% annualised. @ForgeYields allocates to looping / leveraged lending. Pendle, Curve, Balancer, concentrated liquidity, and direct lending opportunities based on their Hallmark risk engine. tradingstrategy.ai/trading-view/v…

Also, hallmark by @ForgeYields forgeyields.com/#hallmark

DeFi vault and curator risk rating providers - @xerberus app.xerberus.io/risk/organisat… - @curator_watch curatorwatch.com - @CredoraNetwork app.credora.network - Core3 core3.io - @mywebacy dapp.webacy.com/vaults

Trading Strategy is heading to New York for @Vault__Summit, Stable Summit and Agentic Finance Summit. Calling for #quants, #assetmanagers, #Alagent developers, #vaultcurators, and #DeFi protocol teams! Meet us for live demos and see our latest datasets tradingstrategy.ai/blog/meet-trad…