Risk Model

To ensure investors have a comprehensive understanding of the potential risks associated with the srETH index, we have implemented a robust risk model. This model aims to evaluate and quantify the various risks involved in investing in srETH, empowering investors to make informed decisions based on a thorough assessment.

The risk model utilized in srETH is the Genesis Risk Model, also known as the Spool Labs Risk Model. This widely respected framework is extensively used within the Spool Ecosystem. The Genesis Risk Model employs a systematic approach to assign quantifiable risk scores to DeFi protocols. It considers a range of essential input parameters, including:

Risk Attribute	Addressing
Risk-Free APY	This parameter evaluates the risk associated with the expected annual percentage yield (APY) in a risk-free environment, providing an indication of the potential returns without considering any protocol-specific risks.
Protocol APY	The Protocol APY parameter assesses the potential annual percentage yield offered by the DeFi protocol, taking into account both the reward rate and the underlying risks associated with the protocol.
Audits	The number and quality of audits conducted on the protocol are considered to evaluate the level of security and robustness.
Bug Bounty	The presence of a bug bounty program indicates the protocol's commitment to identifying and addressing vulnerabilities, enhancing its security posture.
Time Deployed	This parameter reflects the duration for which the protocol has been operational, providing insights into its track record and stability over time.
Total Value Locked (TVL)	The Total TVL parameter gauges the amount of assets locked within the protocol, indicating the level of trust and confidence placed by the community in the protocol's operations.
Depth of Smart Contracts	This parameter evaluates the complexity and depth of the smart contracts utilized by the protocol, which can impact the potential risks associated with the protocol's operations.
Liquidity	The availability of liquidity for the assets of the Protocol is assessed in order to minimize the level of slippage.

By incorporating these parameters into the risk model, srETH provides investors with a comprehensive assessment of the potential risks involved in investing in the index. This empowers investors to make informed decisions based on a quantifiable evaluation of the risks and rewards associated with the SRETH index.