Risk categories

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Risk categories
for GoodGhosting savings pools
At GoodGhosting, we offer different type of decentralized savings pools. These pools may utilize different yield-generating strategies, carrying different type of risks.
Definition of Risk categories
In our user interface, we display a risk category for each savings pool: ranging from very low to high. Please keep in mind that we are simplifying a lot of different risk parameters into one simplified category. No simplification is ever perfect. 

We mainly categorized the savings pools depending on their perceived level of risk regarding impermanent loss and/or a loss in fiat value for our users.
Very low risk
Very low risk for impermanent loss and/or a loss in fiat value.
Typically, these pools require deposits in immutable stablecoins (launched more than two years ago) and use a yield-generating strategy on a well battle-tested and audited protocol. There is no risk for impermanent loss, and a very low risk for loss in fiat value.

Examples:
- Savings pools with DAI deposits using an Aave v2 strategy

Low risk
Low risk for impermanent loss and/or a loss in fiat value.
Typically, these pools require deposits in stablecoins (launched more than one year ago) and use a yield-generating strategy on an audited protocol. The underlying yield protocol may be newer and/or the deposited stablecoin may be censorable or upgradeable (e.g. USDT, USDC, cUSD , cEUR or EURS). There is no risk for impermanent loss, and a low risk for a loss in fiat value.

Examples:
- Savings pools with DAI or USDC or USDT or EURS deposits using an Aave v3 strategy
- Savings pools with USDC or USDT deposits using an Aave v2 strategy
- Savings pools with cUSD or cEUR deposits using a Moola v2 strategy
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Medium risk
Medium risk for impermanent loss and/or a loss in fiat value.
Typically, these pools require deposits in stablecoins and use a yield-generating strategy on an audited protocol. The underlying yield protocol may be newer and/or the deposited stablecoin may be censorable or upgradeable and/or only recently launched (e.g. cREAL, agEUR or jEUR). 
Additionally, the strategy may use a StableSwap AMM pool which is subject to slippage, price impact and has a medium risk of impermanent loss. Hence, there is a real risk that the fiat value at the time of withdrawal is (slightly) smaller, than the combined fiat value at the time of deposit(s).
Examples:
- Savings pools with DAI or USDT or USDC deposits that use a Curve Finance Aave pool strategy
- Savings pools with cUSD or cUSDC or pUSDC deposits that use a Mobius Optics pool strategy
- Savings pools with agEUR or jEUR deposits that use an Aave v3 strategy
- Savings pools with cREAL deposits that use a Moola v2 strategy
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High risk
High risk for impermanent loss and/or a loss in fiat value.
Typically, these pools require deposits in volatile assets (with a high risk for loss in fiat value) or have (indirect) exposure to volatile assets, and use a yield-generating strategy on an audited protocol. The underlying protocol might be newer and/or the deposited assets might be censorable or upgradeable and/or only recently launched.  Additionally, the strategy may use a non-stablecoin AMM pool (such as Curve v2) which is subject to slippage, price impact and has a high risk of impermanent loss. Hence, there is a high risk that the fiat value at the time of withdrawal is (much) smaller, than the combined fiat value at the time of deposit(s).
This category also includes any pool where a user deposits a volatile asset (such as ETH, MATIC or CELO), irrespective of the used strategy.

Examples:
- Savings pools with DAI or USDC or USDT deposits using a Curve Finance atricrypto strategy (leading to exposure to volatile assets)
- Any savings pools with volatile assets (e.g. ETH, CELO, GHST, WMATIC) using any of the available strategies (e.g. Aave v2, Aave v3, Curve or Mobius)

Factors taken into account

We aim to take into account:
Complexity of the yield-generating strategy
The chance of impermanent loss versus the underlying (deposited) asset
The chance of loss versus fiat value (due to the exposure to volatile assets or a loss of peg)
The safety of the underlying assets (e.g. newer vs battle-tested tokens; upgradeable versus not upgradeable; censorable versus uncensorable)
Whether the underlying protocol is battle-tested
Whether the underlying platform had security issues / exploits before
Whether the underlying platform is audited
External risk ratings such as DeFi Safety Reviews and Beefy Safety Score​
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Slippage and impermanent loss
Fees
Last modified 26d ago
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Contents
Definition of Risk categories
Factors taken into account