Description

Sector's risk engine analyzes data to identify and assess risk for various investment strategies. The risk engine powers all of the investment products.

The risk engine...

• Helps users make better-informed decisions about their investing activities

• Provides information about risks associated with specific protocols and crypto assets

• Informs the development of the risk-tranched vaults

The biggest challenge in assessing risk in DeFi consists of accounting for black-swan-like events such as smart contract hacks and stable-coin de-pegs. This is similar to assessing insurance premiums for catasrophic events. We approach this task by estimating probabilites and associated losses for such events.