Collateral Whitelisting

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Vaultedge has designed a rigorous framework for evaluating and whitelisting collateral assets, ensuring that only those meeting the highest standards of liquidity, stability, and risk tolerance are accepted.

This framework establishes key parameters for evaluating and managing collateral within Vaultedge:

• Eligible Collateral – Assets that meet the protocol’s security, liquidity, and stability standards.

• Risk-Adjusted Value (RAV) – The true effective value of each asset within Vaultedge, factoring in liquidity, volatility, and systemic risk.

• Critical Collateralization Ratio (CCR) – The protocol-wide risk threshold that triggers Recovery Mode.

• Risk Parameters – Defines essential risk controls, including:

  • Debt Ceilings – Maximum borrowing limits per asset.

  • Soft Liquidation Thresholds – The point at which vaults enter partial liquidation.

  • Issuance Fees – Dynamic fees based on collateral risk and market conditions.

This methodology ensures a balanced and data-driven approach to collateral risk management, enhancing protocol security and capital efficiency.

Risk Scoring Methodology

Our risk scoring framework evaluates assets based on key quantitative and qualitative metrics to ensure they meet our protocol’s security, liquidity, and stability standards. Each asset is assessed across the following criteria:

• Token Age – Measures maturity and historical performance.

• Team Credibility – Assesses the reputation, track record, and transparency of the asset’s team.

• Peg Stability – Evaluates the stability of RWAs, LRTs, LSTs, and Stablecoins.

• Audit Quality – Reviews smart contract audits for thoroughness and reliability.

• Historical Performance – Analyzes average returns over a defined period (XYZ months) for veTokens.

• Underlying Asset Risk – Assesses the safety ratio, liquidity, and volatility of LP tokens.

• On-Chain Liquidity – Measures the extractable liquidity available on-chain.

• Off-Chain Volume – Evaluates trading activity and market presence beyond on-chain metrics.

• Secondary Market Liquidity – Analyzes liquidity and trading volume for veNFTs.

• Liquid Derivative Stability – Assesses liquidity and peg stability of veNFT derivatives.

• Decentralization – Measures governance distribution and systemic risk.

• Sharpe Ratio – Quantifies risk-adjusted returns for veNFTs.

Instant Disqualification Criteria

Assets that fail to meet baseline requirements in the following areas will be immediately disqualified from the whitelisting process:

• Team Credibility – Lack of transparency, poor track record, or questionable governance.

• Peg Stability – Significant de-pegging risks for LRTs, LSTs, or stablecoins.

• Audit Quality – Absence of credible smart contract audits or unresolved security vulnerabilities.

• On-Chain Liquidity – Insufficient extractable liquidity, making the asset impractical as collateral.

This rigorous scoring methodology ensures only high-quality assets are whitelisted, maintaining protocol security and capital efficiency while minimizing systemic risks.