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Proposal And Evaluation Of Risk Parameters

To maintain the financial security of the STBL, the governance system allows the community to propose and suggest risk parameters for treasury fund management. These parameters serve as essential guidelines to minimize financial exposure while optimizing returns. The Risk Committee uses these inputs to make informed decisions on fund allocation.

Community proposals regarding risk parameters ensure that the treasury operates within predefined boundaries, reducing the likelihood of losses and maintaining liquidity for essential functions. This inclusive approach to risk management fosters transparency and aligns decisions with the collective interest of token holders.

Key Risk Parameters Proposed by the Community​

  • Allocation Limits:

    • Recommendations on the maximum percentage of treasury funds that can be deployed in specific investment categories to ensure diversification.

  • Liquidity Reserves:

    • Guidelines on maintaining sufficient liquidity within the treasury to address unexpected market events, fund operations, or execute buyback programs.

  • Volatility Tolerance:

    • Establishing risk thresholds for investments, ensuring that funds are not overly exposed to highly volatile assets.

  • Counterparty Risk Management:

    • Assessing the credibility and reliability of external protocols and platforms before treasury funds are deployed.

  • Yield Targeting:

    • Proposals on acceptable yield ranges that balance risk and reward across different investments.

  • Exit Strategies:

    • Establishing clear conditions under which funds should be withdrawn to minimize losses or secure profits.

Proposal Process for Risk Parameters​

  1. Submission:

    • Token holders submit proposals suggesting new risk parameters or adjustments to existing ones. Proposals are expected to include data-backed insights, market analysis, and rationale.

  2. Community Deliberation:

    • The proposal is opened for discussions where token holders and experts can provide feedback and evaluate its feasibility.

  3. Preliminary Consensus:

    • Non-binding community voting may be conducted to gauge support and gather broader input.

  4. Final Evaluation by the Risk Committee:

    • After community input is considered, the Risk Committee assesses the proposal's implications on financial stability and protocol resilience.

  5. Implementation:

    • If approved, the recommended risk parameters are integrated into the protocol’s treasury management framework and monitored for compliance.

This transparent and collaborative process ensures that the STBL maintains a robust risk management system. By combining community insights with the Risk Committee’s expertise, the protocol achieves balanced decision-making that safeguards its long-term financial health.