📊 Risk Framework

Risk Framework

MALGIST provides a structured framework to help users understand, compare, and consciously opt into risk when using DeFi strategies.

This framework does not eliminate risk, but makes it explicit, categorized, and user-driven.

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1. Strategy Risk Levels

Each strategy on MALGIST is assigned a risk level based on its execution logic and protocol exposure.

Low Risk

• Single protocol exposure

• No leverage

• Stable or low-volatility assets

• Minimal external dependencies

Example: Lending stablecoins on a blue-chip protocol.

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Medium Risk

• Multiple protocol interactions

• Yield optimization strategies

• Limited exposure to AMMs or liquidity pools

Example: Stablecoin farming with automated rebalancing.

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High Risk

• Complex multi-step execution

• Exposure to volatile assets

• LP positions, incentives, or derivatives

• Higher dependency on external protocol behavior

Example: LP + incentive compounding strategies.

⚠️ Higher potential returns come with higher downside risk.

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2. Risk Disclosure Requirements

Every strategy must clearly disclose:

• Protocols used

• Assets involved

• Execution steps

• Primary risk factors (e.g. liquidation, impermanent loss, protocol risk)

This information is:

• Visible before deposit

• Readable without technical expertise

• Fully transparent and on-chain verifiable

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3. User Opt-In Model

MALGIST follows a strict opt-in philosophy:

• Users must explicitly choose:

  • Strategy

  • Risk level

  • Deposit amount

• No automatic migration between strategies

• No forced rebalancing without user approval

🧠 Users remain fully responsible for their risk decisions.

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4. AI as Decision Support (Not Authority)

If AI insights are available:

• They act as decision support

• They do not override user intent

• All execution remains deterministic and on-chain

AI suggestions are optional, explainable, and transparent.

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Risk Framework Summary

• 📊 Clear risk categorization

• 📜 Mandatory strategy disclosure

• 🧠 Explicit user consent

• 🔍 Transparent execution

• 🤝 No hidden assumptions

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➡️ Next: Known Risks — a clear overview of risks that cannot be fully mitigated in DeFi.