Dao Ops Concerns + The pressing need for a secondary risk manager

Governance Process
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DAO Operational Concerns + The Pressing Need for a Secondary Risk Manager

As discussed in the last community call dated 5th March 2025, we would like to put out some major concerns regarding the Compound DAO operations and carve out a way to contribute and smoothen some processes.

TL,DR:

  • Need for more delegate and service provider accountability and transparency in forum discussions
  • Collaborative efforts against potential governance attacks by certain COMP Whales
  • Temp Check for the pressing need of a secondary risk manager for faster and better recs

Now that the Compound x Morpho x Polygon proposal has successfully reached quorum on the on-chain vote, the DAO must consider some serious implications/flaws that came up while the discussions were going on in the forum. The ones we consider the most important are -

  1. This screenshot shows the major voters in the proposal. What’s really weird is while some major delegates have suppported the proposal on-chain, there was no comment from majority of them on the forum stating their stance on the proposal. It was as if everything happened on backdoor calls. In addition to that, Gauntlet in the best case scenario should have refrained from voting in this proposal because of simple - Conflict of Interest.

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  2. Additionally we would like to get some transparency on who are these two inactive delegates who voted on this particular proposal so early and what medium of communication was used to talk to them if not the forums.

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  3. While on one hand we know Woof’s Sandbox development would take some time and it could be a good opportunity to explore this collaboration between Morpho, Polygon and Compound quickly, this could have been done in a much fairer and transparent way. Otherwise rename it to Morpho x Polygon x Gauntlet lmao.

Also one important thing to bring up is the Delegate Compensation Program Pilot that got rejected when put up on-chain. There are two major concerns on that -

  1. We were intimated that quite a few heavy COMP holding humpy wallets voted against the proposal. This is a major concern to be addressed since Humpy can literally go against any growth centric proposals that might harm his position as a large COMP holder. So as a DAO we need to build a defense mechanism around it. Also some major DAO vote holders could have prevented Humpy from controlling it, but they chose not to vote. If Humpy collaborates to go against the DAO, the DAO should collaborate to counteract it.

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  2. Also, there was the same issue with this proposal on the forum. Very few active or large delegates commented on the proposal, again raising questions on transparency and accountability.

Now coming to the third big incident that happened in the forum, where we as Chainrisk, if allowed by the DAO, could have played a pivotal role in not letting things worsen to this extent. We are talking about Compound V3 deployment on Sonic and the Sonic Team’s pull back from the deployment. Here are some major concerns regarding it.

  1. The Sonic proposal was listed on the forum on 13th Dec and the recommendations from Gauntlet came on 6th Feb. It look close to 2 months for Gauntlet to come up with the recommendations which was one of the main reasons for Sonic pulling out.
    Link to Yohaan’s comment - https://www.comp.xyz/t/governance-proposal-deployment-of-compound-iii-on-sonic/6076/16
    We took just 2 days to come up with the updated recommendations for Sonic, when we saw the above comment from Sonic team.
    This has been definitely one of the biggest setback to the Compound community. On Aave, the TVL has soared past $127M within a week of launch on Sonic. So, the opportunity cost of not having secondary risk provider is pretty heavy for the Compound community.
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  2. Gauntlet is understandably pretty occupied with the Morpho <> Polygon collaboration and that has seemingly affected the timelines for the new chain deployments like Sonic.
    When Sonic team had requested for updation of supply caps, it took close to 3 weeks to take action on it. On the contrary, when the same thing happened on Aave, better recs were given within a weeks time by their risk manager.
    https://www.comp.xyz/t/governance-proposal-deployment-of-compound-iii-on-sonic/6076/13
    For Compound to capitalise the launch on new chains and asset deployments, the community needs a risk provider who will be more active on the forum, doesn’t delay for months to come up with recommendations, is open to introducing new assets as collaterals when requested by the community and fosters a good relationship with other protocols and chains.

Note: At Chainrisk, we have given recs for Ronin within 10 days and updated those, upon request within 3 working days.

As the Morpho <> Compound <> Polygon proposal has been passed, there will be additional risk management requirements for Compound which Gauntlet has to work on, understandably. Here, we believe there’s a strong requirement for a secondary risk provider alongside Gauntlet to work on managing the current markets, help in the launch of new markets and assets, and aid WOOF! in the development of the Sandbox ( from the risk management side ).

Early next week, we would go ahead with a Temp Check proposal for comprehensive risk management services proposal on Compound, to understand the sentiment of the DAO.

Please share your comments and suggestions below. Thank you for your active participation in our proposal.

Regards
Team Chainrisk

4 Likes
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Although the points raised by Chainrisk are clearly self-serving (nothing wrong with that), I share some of their concerns about the Compound x Morpho x Polygon proposal:

(1) Given Gauntlet’s indirect interests in this proposal and their significant share of tokens actively used in governance, it would be preferable for them to abstain on this proposal. They have not disclosed any direct compensation for it: provided that’s true, I don’t view their vote as a serious conflict of interest. If they were receiving direct, undisclosed compensation from Polygon, Morpho, or another third party to bring this proposal to the DAO, that would represent a severe conflict of interest that would shake my confidence in their intentions. I trust that this is not the case and expect them to disclose any such conflict the DAO ASAP if not, especially given their decision to actively vote on this proposal.

(2a) She256 is a good actor non-profit organization promoting inclusion in DeFi and an early recipient of a large delegation from a16z, IIRC. Although their online presence has been muted recently relative to 2021-2022, they do have a recently established Delegate Platform and I look forward to an increase in their participation in Compound governance.

(2b) The address 0x7B3c…cc33 has no ENS, but Etherscan shows it to be a Gnosis Safe used primarily for voting with mattdobel.eth and inkymaze.eth as addresses that have executed txs on it, strongly suggesting that 0x7B3c…cc33 is, practically speaking, also @Gauntlet . This is concerning, as together Gauntlet’s two addresses represent 89% of quorum. At a minimum, I would strongly recommend Gauntlet attach an ENS to this address to avoid the perception that they are hoping to mask the identity of this address in on-chain governance.

Those concerns aside, it is difficult to see Compound moving forward with two risk managers when Gauntlet has taken such a strong stance against distributing these responsibilities. I understand some of their arguments against it, such as the impracticality of having different risk management of assets within the same Comet. However, I believe strongly that there are ways for multiple risk management teams to divide responsibilities (e.g. by Comet) that Gauntlet has shown a strong resistance to even discussing.

I would prefer for Gauntlet and ChainRisk to engage in a good-faith discussion about how they could coordinate to apply their differing strengths to address the needs of different aspects of the growing Compound ecosystem (e.g. ChainRisk for move-fast break-things partnerships like Sonic and Sandbox, Gauntlet for management of core Comets and for any new initiatives like the Morpho x Polygon arrangement that they wish to bring to the table). But if one party refuses to talk to the other, I see nothing but a dead end where the DAO accepts Gauntlet’s shortcomings out of a preference for the simplicity of having a single risk manager.

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We have raised multiple concerns around this in the Morpho <> Compound thread that you can find here. Happy to discuss in more details moving forward. :backhand_index_pointing_down:

Thanks for clarifying this point. Would love to contact them and get their views on our proposal publically on the forum.:backhand_index_pointing_down:

Thanks for detailing this out. No transparency here again. Would request @Gauntlet to clarify this ASAP. And yes the huge chunk is concerning. :backhand_index_pointing_down:

Well this is exactly what we are proposing :backhand_index_pointing_down: - While on one end Gauntlet handles the existing comets on V3 and the Morpho <> Compound Vaults, Chainrisk is here to support on new comet deployments and the development of Sandbox. This will solve for 3 things -

  1. No Conflict of Interest within the DAO moving forward.
  2. Faster recommendations and Faster deployment cycles to foster healthy relationships with partner protocols and Chains.
  3. A bit more aggressive parameters ( while not compromising on the Risks ) to bring more retail and institutional eyeballs which are right now either going to AAVE or our recent DAO partner - Morpho.

For having detailed discussions we propose 3 things -

  1. A healthy, open and transparent discussion on this thread followed by a snapshot of temp check.
  2. A deeper discussion on the next community call.
  3. A one-on-one deeper discussion with us (The TL,DR of which shall be transparently posted on this thread so that everyone is on the same page). Inviting Gauntlet and all other delegates to schedule a call here - Calendly
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Hey. I am just commenting as a long time Compound user and community member. I am not speaking on behalf of Gauntlet here. Needless to say I am very biased though

Compound needs to grow. This is why Alphagrowth’s proposal, though way too large, is fundamentally productive.

Second risk manager doesn’t help with growth, it’s just total waste of time and money. Let’s just say Gauntlet was slow with a recommendation for Sonic (it’s my understanding that the liquidity to support liquidations was just not there until mid Feb and the recommendations came soon after).

Does that mean Compound should pay 500k (or whatever you are asking for) to Chainrisk?

No!

I do think it’s good that people are trying to contribute to Compound. I just hope those contributions were not entirely redundant. It would honestly make more sense for you to just try and compete during Gauntlet’s renewal, though that’s probably a pretty uphill battle for y’all

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Thank you for your comment and it’s good to see feedback on our proposal.

One of the biggest threats to any DAO is centralization risk. This is why Web3 companies, including Compound, undergo multiple audits—it’s not just a best practice but a necessity. Is it a waste of time and money? Absolutely not. Whether it’s technical risk or market risk, involving multiple independent parties ensures a more robust and collaborative approach to risk assessment. Relying on a single risk vendor introduces a clear centralization risk—any miscalculation of parameters or technical oversight by that vendor could lead to severe security vulnerabilities.

At Chainrisk, we’ve openly shared our methodologies for navigating market risks, and it’s evident that our approach differs significantly from Gauntlet’s. These differences naturally lead to varied risk recommendations. Having a second opinion fosters a more engaged and informed discussion on the governance forum, something that is often lacking due to Compound’s reliance on a single risk provider. By introducing multiple perspectives, the Compound community can better understand risk, engage in meaningful discourse, and ultimately choose the recommendations that best align with the majority DAO sentiment.

Compound V3 is one of the largest lending protocols in DeFi, managing nearly $2.7 billion in TVL. If we all share the goal of seeing Compound succeed, innovation must continue. To stay ahead of competitors, we should focus on collaboration rather than internal conflicts, working together for the DAO’s best interests. By striving to enhance the quality of our contributions, we can provide the most value to the DAO. Having two risk vendors will drive healthy competition, pushing both to exceed their limits—ultimately benefiting Compound through more rigorous and refined risk assessments.

First of all, it is really disheartening for us to see how easily you have framed this sentence. As you have mentioned you are speaking as a concerned Compound community member ( not on behalf of Gauntlet), Sonic came to Aave and Compound, actually the first proposal was launched on Compound Forum close to 3 weeks before it was done on Aave. On Aave, they got the market analysis within 2-3 days from both their risk vendors. After 2 months, Gauntlet came up with recs which weren’t updated in another 3 weeks after which Sonic left the chat.

Here’s their comments on why Sonic didn’t proceed with the deployment.

https://www.comp.xyz/t/governance-proposal-deployment-of-compound-iii-on-sonic/6076/16

Even after 10 days, there’s not a single post from Gauntlet team clarifying what happened and why the DAO lost such a great opportunity to capitalise on ( within one week of its launch on Sonic, there’s $130M TVL on Aave ). If Sonic is to become the go-to-chain this season, it’s reasonable to assume this is a loss of $500M TVL on Compound.

This circles back to my first point why having two risk vendors is ‘not a waste of money and time’.

Also, Sonic deployment is not a one-off case. Citing some examples here -

  1. For Ronin Deployment, the first proposal came on Dec 21, and the recs were provided on Feb 8.
  2. Adding cmETH on Mantle, the proposal came on Dec 23, the recs were provided on Feb 1.
  3. Adding SKY as collateral, the proposal came on Dec 13, the recs were provided on Jan 16.
  4. Add Collateral wSuperOETHb, the proposal came on Sept 26, the recs were provided on Dec 6.
  5. Add wOETH Market on Ethereum, the proposal came on Jun 18, the recs were given on Aug 24.

We can keep writing here, but the average turnaround time for Gauntlet has been close to 6-8 weeks. We are proposing to cut that down to 2 weeks. The key importance to note here is in an industry where things move so fast, moving this slow will drive away interests from other protocols about potential collaboration and eventually kill the protocol.

As suggested by @allthecolours, we were and we still are open to discussing on how Chainrisk and Gauntlet can work together. We want the greater good of the DAO above everything and want to see Compound win. Though as @jmo correctly stated, it’ll be a uphill battle for us given, Gauntlet controls 89% of the Quorum and decides to vote against.

We would appreciate genuine feedback/criticism from @jmo and the other delegates. Thank you for your active participation in our proposal.

Regards
Team Chainrisk

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Your critique overlooks the broader context of my action as an aspiring risk management contributor to the DAO. My significant COMP holdings are aligned with the DAO’s long-term success, and my voting decisions prioritize fiscal responsibility and sustainable growth.
The proposal in question, which I opposed, appeared self-serving and misaligned with the DAO’s current financial state. The GSWG sought $288,000 (annually $576K) solely for incentivizing delegate voting. In my opinion, this represents an inefficient allocation of the DAO’s finite resources, particularly given the absence of clear metrics to justify such a substantial recurring expense.
My vote against this proposal reflects a commitment to safeguarding the DAO’s treasury from frivolous expenditures.

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Hey @Humpy, thanks for putting up your point here and clarifying your stance. The critique was broadly to push more accountability and transparency. So, rather than outrightly rejecting a proposal on-chain we would request you to participate actively on the forum discussions and share your views. That way we could probably save a lot of time and find the best way out before pushing any proposal on-chain.

Regards
Team Chainrisk

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Comprehensive Risk Management Services Proposal by Chainrisk

1. Previous Work with Compound

Chainrisk conducted a comprehensive economic audit of Compound V3 on the Arbitrum One Chain as part of the Compound Grant Program (CGP) on April, 2024, with regular updates and active engagement on the grant forum. The audit focused on optimizing risk management and enhancing protocol stability through advanced simulations and stress tests within the USDC market, targeting collateral assets such as Wrapped Ether (WETH), Wrapped Bitcoin (WBTC), GMX, and Arbitrum (ARB). The final report, shared with the community, provides an in-depth overview of Chainrisk’s risk methodology, offering valuable insights into how these recommendations enhance the protocol’s resilience and ensure its sustainable growth in the decentralized finance ecosystem.

Over the past few months, Chainrisk has been actively engaging during the biweekly community calls, provided market analysis on weETH and deUSD & sdeUSD, and parameter recommendations for new market deployments on Ronin and Sonic.

2. Executive Summary

Chainrisk proposes a state-of-the-art risk management solution for Compound Finance, designed to optimize protocol safety, capital efficiency, and sustainable growth. Our comprehensive approach leverages advanced quantitative methodologies, machine learning algorithms, and protocol-specific risk models to test Compound V3 (Comet) Modules and new protocol upgrades in various market scenarios.

Key Highlights:

  • Chainrisk will serve as a secondary risk management provider alongside Gauntlet for all new and upcoming markets on Compound V3, with a special focus on longer-tail assets. We are committed to transparency by making our reports and analyses publicly accessible to enhance community engagement.

  • Chainrisk will deliver comprehensive Quarterly and Annual Risk reports that will encompass our risk management framework, analyses of newly launched markets and added assets, and detailed assessments of high-risk events, including days with elevated liquidation risk, for the Compound protocol.

  • Chainrisk will provide bi-weekly data-driven recommendations for dynamic risk parameters, including but not limited to:

    • Collateral Factor
    • Liquidation Factor
    • Liquidation Penalty
    • Supply Cap
    • Target Reserves
    • Storefront Price Factor

    These recommendations will be based on rigorous quantitative analysis and market conditions to optimize protocol safety and efficiency.

  • Chainrisk will deploy an advanced real-time monitoring and alerting system, providing critical risk insights to protocol stakeholders and facilitating timely responses to market dynamics.

  • Chainrisk will actively support new initiatives like ‘Compound Sandbox’ and mechanism design of Compound V4 to foster innovation and enhance protocol utility. We will collaborate with the WOOF team on PID controller development while applying our risk management expertise to assess risks, propose mitigations, and establish best practices for seamless integration.

  • A full-time team of 6 will be dedicated to Compound with experts in Security, Statistics, Cloud and Data Science, bringing valuable experience from prestigious institutions such as the Ethereum Foundation, NASA, JP Morgan, Deutsche Bank, Polygon, Nethermind, and EigenLayer.

  • A robust knowledge transfer and community engagement program will be implemented to ensure comprehensive understanding and active participation within the Compound community.

  • 12-month engagement (April 1, 2025 - March 31, 2026): $400k base (in USDC, streamed linearly) will serve as the payment for this phase.

3. Company Overview

Chainrisk is an end-to-end economic security & risk management company building tools and services for all Defi protocols and L1, L2s to protect value at risk. Chainrisk specializes in economic security, offering a unified simulation platform designed for teams to efficiently test protocols, particularly in challenging market conditions. Our technology is anchored by a cloud-based simulation engine driven by agents and scenarios, enabling users to create tailored market situations for comprehensive risk assessment.

Key Differentiators:

  • Focus on Capital Efficiency: We prioritize enhancing the top-line of DeFi protocols by exploring innovative avenues of capital efficiency for both protocols and its users.
  • Commitment to Transparency: Risk management shouldn’t be a black box. That’s why we strive to make our analyses as public as possible, fostering trust and clarity within the DeFi community.
  • Advanced Simulation Engine: Our unique dual-pronged simulation engine combines the power of Rust-based off-chain computations with real-time on-chain data, enabling us to conduct precise risk assessments and fine-tune parameters effectively.
  • Community Engagement: We value community input and actively involve users in our risk management proposals. By seeking feedback, we ensure our solutions align with the community’s needs and insights.
  • Agility and Speed: Our agile team is always ready to roll out new tools and strategies quickly, helping DeFi protocols understand and mitigate risks while opening up new opportunities for capital efficiency.

4. Scope of Work for Compound Finance

This proposal outlines a comprehensive approach to enhancing risk management, governance analysis, and user experience for Compound V3.

Deliverables -

A. Risk Management and Analysis

  1. Complementary Risk Management
    • Serve as a secondary risk management provider alongside Gauntlet for all new and upcoming Compound V3 markets ( with no limit on the number of markets ).
    • Expand asset offerings by introducing new collateral types for existing base assets, adding new base assets with corresponding collateral, and actively supporting new chain deployments with full coverage of associated base and collateral assets.
    • Focus on longer-tail assets to ensure comprehensive coverage.
  2. Comprehensive Reporting
    • Deliver Quarterly Risk Reports (4 per year).
    • Provide an Annual Comprehensive Risk Report.
    • Include:
      • Risk management framework details
      • Analyses of newly launched markets and added assets
      • Assessments of high-risk events, particularly days with elevated liquidation risk
  3. Data-Driven Recommendations
    • Provide bi-weekly recommendations for dynamic risk parameters:
      • Collateral Factor
      • Liquidation Factor
      • Liquidation Penalty
      • Supply Cap
      • Target Reserves
      • Storefront Price Factor
  4. Real-Time Monitoring & Alerts
    • Implement an advanced real-time monitoring and alerting system.
    • Provide critical risk insights to stakeholders.
  5. Supporting New DAO Initiatives
    • Offer risk management/mechanism design support for new DAO initiatives, including recent proposals like the Compound Sandbox development by the WOOF team and Compound V4 as a whole.

B. Community Engagement and Knowledge Transfer

  1. Knowledge Transfer Program
    • Implement a robust knowledge transfer initiative.
    • Conduct regular community engagement sessions.
  2. Transparency
    • Ensure all reports and analyses are publicly accessible.
    • Provide clear documentation and resources for community understanding.

5. Detailed Service Offerings

5.1 Proposed Risk Management Framework for Longer Tail Assets

Long-tail assets in the cryptocurrency landscape refer to digital tokens characterized by low market capitalization and trading volume, positioning them at the periphery of the market compared to dominant cryptocurrencies like Bitcoin and Ethereum. Long-tail assets often attract speculative trading strategies, where traders aim to leverage short-term price movements in these less liquid markets.

Long-tail assets play a pivotal role in portfolio diversification, offering exposure to niche sectors within the cryptocurrency ecosystem. This category encompasses various tokens such as liquidity provision (LP) tokens, liquid restaking tokens (LRTs), liquid staking tokens (LSTs), real-world assets (RWAs), and vault tokens. While these assets hold the promise of high returns, their limited presence on mainstream decentralized finance (DeFi) platforms underscores the necessity for robust risk management strategies.

Read here for detailed analysis for onboarding long-tail assets.

5.2 Risk Monitoring and Alerting Dashboard

Chainrisk proposes to develop a comprehensive risk monitoring and alerting dashboard for Compound, focusing on real-time user positions, market dynamics and simulations. This powerful tool will provide valuable insights for both the protocol and its users, enabling them to make well-informed choices about their respective positions and strategies.

Key Features

Protocol Risk Analysis

The dashboard will offer in-depth protocol and market-specific risk analysis, including ( but not restricted to ) :

  • Supply and borrow metrics per asset per market
  • Asset-specific Utilization rates
  • Asset distribution for supply and borrow
  • Value at Risk (VaR) and Liquidations at Risk ( LaR ) calculations per market
  • Protocol reserves distribution
  • Identification of accounts at risk of liquidation
  • Market Risk Alerts

User Analysis

To enhance user experience and decision-making, the dashboard will provide:

  • Real-time user metrics
  • User wallet breakdown and distribution
  • Individual user health scores
  • Simulations of user health based on asset price fluctuations

This comprehensive user analysis will enable Compound users to better understand and manage their positions.

6. Technical Implementation

The Chainrisk Simulation Engine is a sophisticated, modular testing environment designed to conduct high-fidelity simulations of DeFi market scenarios. It comprises two key components:-

  • RiskEVM: A high-performance, Rust-based simulation engine optimized for computationally intensive tasks. RiskEVM models complex protocol interactions, including borrowing, lending, and liquidation events under various market conditions. This component enables a comprehensive assessment of protocol behaviour and stability, particularly during periods of market stress.
  • On-Chain Simulation: This component executes backtests on forked mainnet networks, ensuring simulation accuracy and fidelity to real-world scenarios. By leveraging actual on-chain data, it evaluates protocol responses to diverse conditions, providing insights into resilience and potential vulnerabilities.

The integration of these components allows Chainrisk to identify potential risks and optimize parameters with a high degree of precision. This dual-pronged approach combines the efficiency of the Rust-based simulation engine with the accuracy of on-chain data, enabling robust risk assessment and parameter optimization for DeFi protocols.

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Read here for detailed technical architecture of Chainrisk Simulator and Cloud Architecture.

7. Performance Metrics and KPIs

Financial Metrics

  1. Growth in Supply Volume: Monitor the increase in the total supply volume as a key indicator of market engagement and expansion.
  2. Revenue Growth: Track the increase in revenue due to introducing new markets.
  3. Community Adoption: Track the borrowing activity as a measure of market adoption and liquidity utilization.

Community Engagement and Satisfaction

  1. Community Net Promoter Score (NPS): Survey the community to gauge satisfaction with the Compound-Chainrisk relationship.
  2. Community Engagement Metrics: Track community participation in security-related discussions, forums, and educational initiatives.

8. Timelines

  • For new Comet deployments on existing chains, risk recommendations will be delivered within one week.
  • For new chain deployments on Compound, recommendations will be provided within two weeks from the date the proposal is listed on the forum.

9. Fee Structure

Compensation

  • We will be utilizing the Compound Aera Vault and Llama Pay for the payment process. The payment stream will be executed on a per-second basis over a period of twelve months, from April 1, 2025 to March 31, 2026.
  • A total of $400,000 USDC will be distributed during this period. Given the exact duration of 31,449,600 seconds, this results in a payout rate of approximately 0.01272 USDC per second.
  • Early Termination Clause: Compound DAO can terminate the contract after 6 months (October 1, 2025) if unsatisfied with progress. In the event of early termination: Base compensation will be prorated for completed months

10. References to Previous & Upcoming Work

You can find in this section links to our work:

Research from the Team - Chainrisk Simulation Engine | Chainrisk VaR Methodology | DeFi Lending & Borrowing Risk Framework | Multi-Agent Influence Diagrams ( MAIDs ) for DeFi Governance | MAIDs Video

11. Conclusion and Next Steps

We would go ahead with a Temp Check proposal for comprehensive risk management services proposal on Compound, to understand the sentiment of the DAO. Please share your comments and suggestions below. Thank you for your active participation in our proposal.

Regards
Team Chainrisk

1 Like
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As discussed in the last community call, we would again like to invite all the delegates to share their valuable insights here.

——

Regards
Sudipan
CEO, Chainrisk

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How the Compound Gov WG Can Be of Service

  1. Facilitator of Role Definition

    • Host a public scoping session between Gauntlet and Chainrisk to define overlapping vs. distinct services.
    • Draft a Risk Provider Mandate Matrix to share with the DAO.

  2. Standards Architect

    • Propose a “Compound Risk Charter”: A public standard for response times, forum engagement, reporting frequency, and conflict disclosures.
    • Create a Template Risk Update Dashboard (similar to Aave’s risk scorecards) that both vendors contribute to.

  3. Neutral Feedback Conduit
    Operate a Gov WG Feedback Form where community members and tokenholders can flag:

    • Delays in recommendations
    • Lack of risk coverage
    • Conflicting outputs from providers
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I’m interested in what people think about having an “AI Risk Manager” that can produce recommendations using Open Source code everyone can review. I see very little that can’t be automated on the OZ Checklist, even following up to get questions answered can be done with an AI.

Toward an AI Risk Manager as a secondary risk manager, I produced this Proof of Concept at the most recent ETH Global Trifecta Hackathon. L.O.L.A stands for "Lending Organization Listing Assistant.

Left: Landing page where asset issuers can pay LOLA to run the analysis and produce a initial parameter recommendation. Right: Example collateral asset listing proposal (i.e., a gov forum post).

Screenshot 2025-03-25 at 6.12.25 PM
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An AI risk manager provides something no human risk manger can provide: a transparent, reproducible, data-driven risk assessment. As an open source assistant, it’s policies are transparent, it can be run by anyone at anytime, and as a community we can all help codify how it performs it’s assessments. It would also be somewhat impartial, though the prompting ofc would be someone biasing, at least we can all read it.

It’s certainly not designed to replace human risk managers though, that might be a good thing to work towards as the velocity of digital assets that need review for listing explodes.

Let me know if this is something of interest. I could put a proposal together for the CGP Questbook if the community thinks it’s a worthwhile pursuit.

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We appreciate the response from the Compound Governance Working Group (CGWG) and their efforts in facilitating smooth coordination between Chainrisk and Gauntlet. The outlined framework provides a solid foundation for improving risk oversight within Compound.

We would like to contribute additional considerations and welcome feedback from Gauntlet, CGWG, and the broader Compound community.

1. Defining Distinct and Overlapping Responsibilities

One of the key priorities should be establishing clear distinctions between overlapping and independent responsibilities between the two risk vendors.

  • Distinct Responsibilities: Chainrisk is prepared to be highly responsive to new asset, market, or chain listing requests from partners by providing comprehensive risk assessments. Additionally, if Gauntlet maintains a risk-averse stance on listing longer-tail assets, Chainrisk is open to assuming responsibility for their assessment. Given Gauntlet’s collaboration with Morpho, Chainrisk can work closely with WOOF on Compound Sandbox initiatives.
  • Overlapping Responsibilities: Collaboration on market risk dashboards and discussions on risk parameter adjustments is critical. If Gauntlet is open to collaboration, we can jointly develop recommendations. Alternatively, if distinct recommendations are provided, CGWG and the broader community can decide which approach best aligns with Compound’s needs.

2. Proposed Timelines for Risk Recommendations

To ensure efficiency and transparency, Chainrisk commits to the following response times:

  • New Collateral Deployments on Existing Comets: Risk recommendations will be delivered within 3-4 days.
  • New Comet Deployments on Existing Chains: Risk recommendations will be delivered within one week, assuming an analysis of two collaterals per Comet deployment.
  • New Chain Deployments on Compound: Risk recommendations will be provided within two weeks from the date the proposal is listed on the forum, based on the assessment of two Comet deployments, each with two collaterals.
  • Partner Requests (e.g., supply cap increases): Responses will be delivered within 3-4 days.

We invite CGWG and the extended Compound community to provide feedback on these proposed timelines and any areas that needs further clarification. Our goal is to establish a robust, efficient, and transparent risk management framework that serves the best interests of the Compound ecosystem.

Regards
Sudipan
CEO, Chainrisk

3 Likes