Risk Framework

The BasisOS risk framework is built around a multi-layered approach that safeguards the protocol against extreme market fluctuations while ensuring efficient capital utilization. At its core, the framework sets quantitative risk limits through parameters like Maximum Leverage and Margin Treasury. Maximum Leverage caps the exposure by defining the highest allowable leverage—ensuring that even under adverse price movements, the likelihood of triggering liquidation remains minimal. Meanwhile, the Margin Treasury acts as a short-term volatility buffer by using the 95th percentile of recent price changes, which helps to prevent sudden market moves from eroding the strategy’s performance. Together, these metrics form the backbone of BasisOS’s proactive risk management strategy, keeping the system within safe operational boundaries.

Complementing these measures, the framework also employs Assets Clustering and Strategy Capacity to tailor risk controls for different asset classes and market conditions. Assets Clustering uses statistical methods to group similar tokens based on their volatility and liquidity characteristics, which is particularly important for exotic, long-tail assets that may lack extensive historical data. This ensures that risk parameters are customized to each asset’s specific profile. Additionally, Strategy Capacity determines the maximum amount of capital that can be effectively deployed, balancing both spot and hedge positions to limit slippage and maintain sufficient market depth. Overall, the BasisOS risk framework provides a comprehensive and dynamic system that not only protects user investments during volatile periods but also supports the protocol’s long-term sustainability and profitability.

To get detailed information on the BasisOS risk framework please refer to BasisOS Whitepaper.