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Overview

Centuari employs a comprehensive risk framework to protect users and the protocol.

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Risk Categories

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Smart Contract Risk

Mitigation

  • Multiple audits
  • Bug bounty program
  • Formal verification
  • Timelocked upgrades

Response

  • Pause functionality
  • Emergency withdrawal
  • Insurance fund

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Oracle Risk

Price feed failures could cause incorrect liquidations.
MitigationDescription
Multiple sourcesChainlink primary, TWAP fallback
Staleness checksReject stale prices
Deviation limitsCap single-block moves
Circuit breakersPause on extreme volatility

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Liquidity Risk

Insufficient liquidity for withdrawals or liquidations.
MitigationDescription
Cash buffersMinimum liquidity reserves
Withdrawal queuesOrderly processing
Liquidation incentivesCompetitive rewards
Protocol reservesBackstop fund

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Counterparty Risk

Borrower default or collateral loss.
MitigationDescription
Overcollateralization110-150% minimum
Automated liquidationHealth factor monitoring
Collateral qualityStrict asset listing
InsuranceCoverage for shortfalls

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Collateral Risk Parameters

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LTV Ratios

Asset CategoryMax LTVRationale
Major Crypto (ETH, BTC)75-80%High liquidity, known volatility
Stablecoins90%Low volatility
Tokenized Equities60-65%Trading hour gaps
Tokenized Treasuries85%Very low volatility

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Liquidation Thresholds

Buffer between max LTV and liquidation: 
Max LTV: 80%
Liquidation Threshold: 85%
Buffer: 5%

User at 80% LTV has 5% collateral drop buffer before liquidation

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Protocol Parameters

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Global Limits

ParameterValuePurpose
Max utilization95%Reserve buffer
Min maturity7 daysOperational minimum
Max maturity365 daysRisk limitation
Protocol fee0.1%Revenue

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Asset-Specific Limits

Each asset has:
  • Borrow cap (maximum total borrowed)
  • Supply cap (maximum total supplied)
  • Reserve factor

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Risk Monitoring

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Real-Time Metrics

MetricAlert Threshold
Total utilization>90%
Large position concentration>10% of TVL
Oracle deviation>2% from TWAP
Pending liquidations>$1M

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Daily Reports

  • Position health distribution
  • Collateral composition
  • Rate curve analysis
  • Protocol revenue

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Emergency Procedures

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Pause Mechanism

Level 1: Pause new positions
Level 2: Pause withdrawals (except emergency)
Level 3: Full protocol pause

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Guardian Actions

Multi-sig can:
  • Pause specific functions
  • Adjust risk parameters (within bounds)
  • Execute emergency withdrawals
Cannot:
  • Steal user funds
  • Upgrade without timelock
  • Change core parameters instantly

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Insurance

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Protocol Insurance Fund

  • Funded by protocol revenue (10%)
  • Covers bad debt from liquidations
  • Target: 5% of TVL

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External Insurance

  • Smart contract coverage via Nexus Mutual
  • Users can purchase individual coverage

Insurance Details

Learn about coverage options