Overview of the Risk Framework
Steakhouse’s primary responsibility is to preserve principal and enable liquidity for our users. Every Steakhouse onchain opportunity is powered by the same team, technology stack, and risk management system.
Our philosophy is to mitigate as much risk as possible upstream - generally at the market creation and vault governance levels - while instituting automated processes, with manual overrides, downstream to minimize risk and maximize liquidity provision.
Therefore, Steakhouse’s risk management framework is focused around three activities:
Market selection and configuration
Vault setup and controls
Portfolio monitoring and reallocation
Each step reduces the credit risk exposure of all users of Steakhouse onchain products, while the third is primarily responsible for maximizing liquidity available to users who wish to withdraw their assets from any Steakhouse vault.
Our Prime mandate is stability, allocating to or lending against only against the most liquid and robust collateral in crypto.
Our High Yield mandate involves underwriting longer tail and higher-risk assets with higher underlying yields. These assets - for instance, Pendle PTs or productive stablecoins - have relatively price-inelastic borrowers that supply yield to lenders.
Each asset considered by any of our vaults is underwritten with extreme scrutiny and subject to collateral assessment around credit risk, operational risk, governance risk, technical risk, and quantitative liquidity risk modeling. Constant open lines with issuers is a non-negotiable threshold for collateral onboarding to ensure we can maintain our market-leading incident response time.
If an asset meets our bar, our expertise in market design mitigates risk upfront. Understanding the asset, setting responsible LLTV parameters, and ensuring robust oracle infrastructure enables our automated risk management and reallocation engines to operate with high availability and accuracy.
Collateral Standards
Our collateral standards drive our underwriting process. We generally focus on issuer-risk to understand risks to solvency at the asset level. Platform risk is the resilience of an additional DeFi protocol layer built on the collateral or underlying asset, for example, in derivative or interest rate markets. Market risks derive from an exposure's liquidity, price volatility or LLTV levels.
For more, consult our Collateral Risk Framework.
Risk Monitoring and Management
We monitor risks actively both through manual observation and automated alerting systems developed in coordination with our partners. We aim to configure any of the platforms we create opportunities on with setups that meet our standards for counterparty risk exposure. We aim to maintain configurations that ensure non-custodial access to these products as a primary way of minimizing counterparty exposure.
For more, consult our Risk Monitoring & Management.
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