Yeti Finance

Introduction

Conducted an in-depth risk assessment and parameter optimization analysis for Yeti Finance—a pioneering lending and borrowing protocol modeled after a Liquity V1 fork. Our study rigorously examined multiple market risk scenarios, including extreme events akin to Crypto Black Thursday, and identified critical parameters to safeguard protocol solvency.

By evaluating the interactions of collateral mechanisms, liquidation triggers, and stability pool dynamics, our recommendations not only enhance the protocol’s risk management framework but also improve its capital efficiency and overall resilience.

Scope

This engagement covered a comprehensive review of Yeti Finance’s system design and operational parameters, with a focus on:

• Evaluating core mechanisms such as trove configuration, risk-adjusted value calculations, and the interplay between liquidation and redemption processes.
• Conducting agent-based simulations to stress-test the protocol under diverse market conditions—ranging from severe asset devaluations to network congestion and delayed liquidations.
• Defining optimal parameter settings for collateral ceilings, fee structures, and risk multipliers across Low, Medium, and High Risk asset classes.
• Analyzing the performance and responsiveness of the Stability Pool during adverse scenarios to ensure consistent system solvency.