> For the complete documentation index, see [llms.txt](https://docs.midas.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.midas.app/investment-risk-management/risk-monitoring.md). # Risk Monitoring ### Risk Management & Monitoring The Midas risk management framework utilises automated monitoring, data processing, and scenario analysis to ensure portfolio operations adhere to defined investment mandates. #### Core Infrastructure & Data Integration Midas uses [1Token](https://1token.tech/), a Portfolio Management System (PMS), to monitor underlying positions across all venues. Data is aggregated from three primary sources: * **DeFi (On-Chain):** Data is sourced via RPC endpoints and platforms like DeBank to capture EVM and non-EVM wallet balances. * **CeFi (CEX/DEX):** API integrations capture live positions, transactions, and P\&L from external exchanges. * **Synthetic/OTC:** Off-chain agreements are integrated into the system to reflect total portfolio exposure. Raw data fetched from the PMS is processed through internal scripts to resolve nested DeFi positions, such as liquid staking receipts and wrapped tokens. These are mapped to their ultimate underlying asset (Delta Currency) to calculate exact exposure. #### Risk Classification Positions are categorized into three distinct risk profiles: 1. **Market Risk:** Exposure to the price volatility of standard assets (e.g., BTC, ETH) and the base currency of the fund. 2. **Depeg Risk:** Exposure to the price of a stablecoin relative to its fiat peg, which is measured as equivalent to the credit risk of the stablecoin issuer. 3. **Protocol & Counterparty Risk:** * **General Protocol Risk:** Potential loss from smart contract vulnerabilities, hacks, or operational errors across wallets and DeFi protocols. * **Explicit Credit Risk:** Contractual risk of loan non-repayment or collateral impairment in borrowing/lending pools. * **Venue/Custodian Risk:** Exposure to the centralized exchanges, custodians, or brokers holding the assets. #### Automated Surveillance & Limit Framework Automated snapshots track portfolio composition, valuations, and greeks against predefined limits. The system monitors for: * **Issuer & Counterparty Limits:** Maximum allowable allocations to specific fiat currencies, stablecoins, networks, tokens, self-custody wallets, custodians, and exchanges. * **Leverage Limits:** Constraints on Initial Margin and Maintenance Margin (IM/MM) ratios, net/gross delta relative to equity, and individual account leverage. * **Market Neutrality:** Verification that delta exposures by asset class remain within fund-specific bounds. Deviations from these thresholds trigger automated alerts to the Risk and Operations teams. This process identifies pricing anomalies, asset mapping errors, or limit breaches prior to the formal Net Asset Value (NAV) publication cycle. #### Scenario Analysis Stress tests are calculated on a fund-by-fund and firm-wide basis to model potential losses under specific conditions: * **Credit Loss Scenarios:** Simulating predetermined haircuts applied to all borrowing/lending protocols and yield-bearing assets that carry explicit contractual risk. * **Depeg Scenarios:** Calculating the P\&L impact of applied haircuts on specific stablecoin holdings. * **Systemic Default Risk:** A combined scenario where all credit protocols and stablecoins are shocked simultaneously. Projected losses are capped by the limited liability structure of the levered accounts. The portfolio composition and exposures are periodically published in our [transparency section](https://midas.app/transparency). --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.midas.app/investment-risk-management/risk-monitoring.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.