Risk Factors

We have developed our assessment framework by drawing upon the best practices observed in the existing market, which includes incorporating insights from the DeFi Score framework created by the Codefi team.

Our comprehensive assessment takes into account several critical factors that are instrumental in determining the viability and security of assets and collaterals within the Unitus protocol.

The factors considered in our assessment framework include:

Smart Contract Risk

Smart contract risk is assessed by examining the type of token proposed. Standard ERC-20 tokens typically undergo an internal vesting process, granting them immediate clearance for use as collateral. For ERC-20 tokens that deviate from the standard, our developer team conducts a thorough review before proceeding. Non-ERC-20 tokens require external verification, either through auditing by recognized firms or technical reviews by respected community members.

Financial Risk

Financial risk is evaluated by considering factors like the token's market capitalization, liquidity, and historical price volatility. Collaterals with higher market capitalization and liquidity tend to be more stable and secure.

Counterparty Risk

Counterparty risk is assessed through the review of the token's issuer, governance structure, and community support. Assets with strong backing and governance are considered less risky.

To ensure transparency and accountability, we generate test scores for each asset, providing an overall risk assessment result within a range of 0 (worst) to 100 (best). All proposed assets must achieve a minimum score of above 60 according to the Unitus Risk Framework to be eligible for listing and use within the Unitus protocol.