Introduction
IntoTheBlock (ITB) is requesting a grant from Vesta Finance to build risk management tools for Vesta Finance and its community. A risk dashboard will be hosted on ITB’s recently-launched Risk Radar platform providing open access for anyone to monitor the custom built risk indicators for Vesta Finance free of cost. In addition to the charts and graphics generated in the risk dashboard, users will also be able to download CSV files for all metrics and go through extensive documentation to better understand them. Finally, Vesta Finance core contributors will also be able to access the data for these indicators near real-time via API.
About ITB
ITB was founded in 2019 and is one of the largest crypto market intelligence providers. We have support in our app for custom analytics for more than 9 blockchains, +1000 coins, +5000 NFT collections, and 10 DeFi protocols, as well as other traditional finance metrics. Our analytics are available for both retail users and institutions, integrating with partners such as Binance, CoinGecko, CoinMarketCap, Bitstamp, Deribit, Decrypt, Coindesk, and Tradingview, in addition to 300+ other companies.
Over the past two years IntoTheBlock has been heavily involved in DeFi. This started with the launch of DeFi Insights analytics and has grown significantly through our Institutional Quantitative Strategies (ITB Quant) service. ITB’s DeFi Quant platform acts as a gateway used by 20+ of the largest crypto institutions to access DeFi yields via sophisticated non-custodial strategies with appropriate risk management models.
To help streamline institutional and individual adoption of DeFi, IntoTheBlock decided to make risk metrics and models accessible via APIs and analytics dashboards through our recently launched Risk Radar Platform. The goal of the Risk Radar is to help protocols and their users transparently monitor the health of a DeFi protocol and make proactive decisions about their economic risk conditions.
Motivation
Outside of the technical risks that are inherent to DeFi smart contracts, economic risks are also present for users when managing their positions on a protocol. While DeFi teams work hard to mitigate technical risks associated with their protocol, economic risks can still persist. These economic risks can affect lending and CDP protocols and can have substantial impacts on their users.
ITB’s Risk Radar helps to provide additional risk management to the protocol and its users through tools that monitor economic risks. Examples of how ITB’s risk indicators can be used to monitor liquidations is highlighted in this article written by the CEO.
The specific goal ITB aims to achieve for the Vesta Finance grant proposal is to build a risk dashboard that monitors economic factors that can have an impact on its users and the protocol at large. The indicators in the Risk Radar dashboard will improve Vesta Finance by providing near real-time data on economic risks inside and outside the protocol.
The foundation of the DeFi risk monitoring engine is ITB’s expertise and experience safeguarding hundreds of millions into DeFi for institutional partners. This is why Euler, Benqi, Moonwell and other upcoming protocols have partnered with ITB to provide economic risk indicators for their lending and CDP stablecoin protocols. We believe that these tools would allow Vesta Finance’s community to track economic risks that can affect the protocol and help substantially reduce risk exposure.
Added Value to Vesta Finance
The indicators in the Risk Radar dashboard will complement or improve current analytic metrics for VST by providing near real-time data on economic risks inside the protocol, such as health factors of VST minters and VST supply flowcharts. Indicators that show historical data for the Vesta Reference Rate (VRR) and Stability Pool returns will provide insights to Vesta Finance users to determine the economic risks they want to take when borrowing or securing the protocol. Additional indicators like open and historical liquidations and the Stability Ratio, provide the community with insight into the health of the liquidation process for VST. Furthermore, ITB looks to address economic risks for VSTusers that exist outside the protocol. The tracking of VST’s liquidity in AMM pools can improve VST users’ experience. Indicators that monitor the exit fees if a whale withdraws from their LP position and the value distribution of pools that include VST can be used to monitor slippage and warn of potential de-pegging events.
The dashboard that ITB will create will be hosted on ITB’s Risk Radar Platform alongside other large protocols (Benqi, Moonwell, Euler, and others). As the risk dashboard will be publicly available for anyone to use, it will be a useful tool to engage new and existing Vesta Finance users. Additionally, Vesta Finance will have immediate exposure to 300k+ monthly visits to ITB’s Analytics and Risk Radar platforms from over 50k users and to ITB’s institutional clients that use ITB’s Quant services platform to make decisions on their DeFi deployments.
Specifications & Implementation
ITB is requesting $60,000 to enable near real-time economic risk monitoring and analytics for the Vesta Finance protocol. Specifically, the grant will cover the following deliverables:
- Risk API: REST API enabling access to all the proposed indicators.
- Risk dashboard: Web interface that includes visualizations of the risk indicators.
- Documentation and use cases: Complete documentation of all risk indicators included in the release and practical explanations on how these can be used. Example of Benqi GitBook.
The full breakdown of the platforms and technologies that will be used to build the Vesta Finance Risk Radar can be found in our costs transparency document.
Proposal Milestones & Payments
ITB is requesting payments to be structured by milestones along with an initial set up fee in the following way:
- Upfront payment ($10k)
- Indicators 1-10 (dashboard + API) ($15k)
- Indicators 11-20 (dashboard + API) ($15k)
- Documentation covering Vesta Finance’s risk dynamics ($10k)
- Quarterly upgrades and maintenance, such as adding new tokens, modifying metrics based on feedback, covering infrastructure costs, and integrating new chains ($10k)
Indicators are subject to modification based on feedback from the community and Vesta Finance’s team. ITB is committed to maintain and expand the capabilities of the Vesta Finance risk monitoring solution that address changes to the protocol or market conditions.
Timeline
The aim would be to have the Vesta Finance ITB Risk Radar product available with the proposed indicators one to two quarters after the grant terms have been agreed upon.
Overall Costs
As stated in the specifications section, ITB is requesting a grant for $60k. ITB has built similar offerings for the Euler and Moonwell protocols within the range of $60k to $85k. This is intended to cover developer and infrastructure costs. For the Vesta Finance proposal we estimate a similar cost.
We value the community’s feedback and would be committed to finding an offering that works for the Vesta Finance protocol and its users.