Weekly RiskDAO report 7 Mar ‘23

All referenced data can be accessed directly on the Vesta dashboard by RiskDAO.


Alpha Homora x Iron Bank

Alpha Homora (AH) & Iron Bank (IB) are at a stand-off over $32m bad debt Iron Bank incurred as part of an exploit in Feb 2021, caused by a glitch on the part of Alpha Homora.

Alpha Homora was one of the first protocols to enter DAO-2-DAO protocol relationship with Iron Bank to receive undercollateralised loans. As a consequence, IB held no collateral to liquidate when the hack happened but relied on financial guarantees by AH.

To resolve the situation, both parties agreed a scheme to make Iron Bank whole: 20% of AH‘s revenue and 50m in $Alpha token as collateral. The revenue split has generated $5k in monthly revenues and the $Alpha token price has declined significantly in price since the agreement was struck.

It appears the situation accelerated as the $Alpha token fell significantly and in return impaired the collateral value. IB asked for the collateral to be topped off and didn’t receive a response within a 3 day deadline.

As of 1st March, Iron Bank has frozen all AH user deposits into IB to enforce a bad debt repayment. The Iron Bank team updated a contract configuration to freeze the deposits. Iron Bank is basically holding AH‘s depositors accountable to repay AH‘s DAO debts. This sets a precedent on how financial responsibility is shared between a protocol and its users towards external partners. Besides, it challenges the notion of decentralisation in DeFi.

AH is actively trying to mitigate the impact on its users through legal means, white hat hackers and calls to Circle/Tether. AH has issued a series of Open Letters to appeal to IB and the DeFi community.

This is a developing story and IB has set a deadline of 5 March, 23:00 GMT to receive the bad debt repayment and a repayment of all AH v2 debts.

Silvergate Bank

Silvergate Bank, one of the largest banking partners to crypto exchanges and market makers, has delayed its financial results for 2022. The Bank indicated it might not be “going concern” as its capital base has been weakened in the wake of the crypto downturn in 2022. Unsurprisingly, markets took a beating in the wake of the announcement. Major players like Coinbase and Paxos have publicly declared immaterial exposure to Silvergate.

Dashboard Highlights

The cap utilization of gOHM increased by 200bps to 98%.

The VAR for the worst day simulation stands at zero. Current MCRs are at or above recommended levels.

The weight of $VST in the VST-FRAX has decreased from 79% to 72%.

Total pool collateral has decreased from $21.6m to $20.6m. gOHM remains the #1 collateral asset accounting for $14.1m or 68% of total collateral base, followed by DPX which stands at $3m (14.7% of total collateral) and sGLP remains stable at $2.2m (11% of total collateral).

Total debt amounts to $8.6m (-$0.2m) which equates to a utilization rate of 41.7%. The Top 10 debtors account for 52% of the total debt volume.