Gauntlet Launches Synthetix Risk Dashboard

Over the last couple of months, the Gauntlet team has built the infrastructure to ingest market data and run simulations and economic stress tests on the Synthetix ecosystem. These simulations inform parameter recommendations to the protocol, the most recent being SCCP-204.

We are excited to announce that Gauntlet has launched the Synthetix Risk Dashboard. The dashboard reflects Gauntlet’s recommendations for the protocol.

There are two goals for the initial dashboard launch. First, to help the community understand our methodology and recommendations. Second, to communicate how these recommendations mitigate risk and increase capital efficiency for the protocol.

• Value at Risk (VaR), Liquidations at Risk (LaR), and Mint Usage (MU) are topline measures of Risk and Capital Efficiency, respectively. VaR conveys capital at risk due to insolvencies when markets are under duress (i.e., Black Thursday). LaR conveys capital at risk due to liquidations when markets are under duress. We currently compute VaR and LaR at the 95th percentile of our simulation runs, assuming higher than normal volatility. Mint Usage defines how aggressively users are minting sUSD against their collateral, calculated as Total Borrow / (Total SNX collateral * min c-ratio).

As shown below, the front page of the dashboard shows Gauntlet’s recommendations and the impact of the recommendations on VaR, LaR, and Mint Usage. There are tradeoffs between risk and capital efficiency. For example, increasing the collateralization ratio may reduce insolvency risk, but the drawback is reducing capital efficiency for users.

Scrolling down the front page, we see that SNX is the only collateral asset currently. In the “Synth Risk” section, we dive into the risk for each Synth. LaR and VaR represent the insolvency and liquidation risk attributable to each Synth. For example, if a user mints sUSD and converts 50% of the sUSD into sETH and the rest into sAVAX, and if this user has $1,000 of capital liquidated in our simulations, then there would $500 of sETH and $500 of sAVAX included into the Synth-specific LaR.

Clicking into Synth-specific pages will bring you to a page that looks like the below. Here, the heatmaps show the expected insolvencies, liquidations, and system collateralization under different volatility and protocol parameterization settings. These heatmaps provide insight into the impact of Gauntlet’s recommended parameter changes.

In Synthetix, a user’s risk position and profit depend not only on the specific assets they own but also on all the assets in the shared debt pool. Price trajectories of all the assets in the shared debt pool impact the profit of all users regardless of which Synths each user individually has minted. Our financial models capture these unique dynamics and protocol-specific mechanisms, including self-liquidations.

We hope the Risk Dashboard is valuable for the Synthetix community and governance participants. Feel free to provide feedback directly to us using the Send Feedback button on the dashboard!