🧘‍♂️Risk framework

Aladdin DAO's absolute priority is to guarantee the integrity of all stakeholders' capital. Please find the risk framework applied to f(x) Protocol below.

Risk Management Framework

• Real-time monitoring of xPOSITION leverage and collateralization ratios, with automatic triggers for rebalancing or liquidation to ensure stability.

Real-Time Leverage Fluctuations

• Leverage ratios are dynamically adjusted in response to market volatility and user actions, maintaining balance across the system.

Rebalance and Liquidation Triggers

• Threshold-based mechanisms initiate rebalancing or liquidation to preserve system integrity and stability.

Reserve Fund and Bad Debt Redistribution

• Reserve funds bolster the system’s risk resistance.

• In cases of under-collateralized debt, the shortfall is proportionally redistributed across active positions if reserves are insufficient.

Recapitalization

If the total collateralization ratio drops below 100%, the protocol halts new xPOSITION openings and deploys protocol assets to restore the fxUSD peg.