KIP-124: Gauntlet Partnership

Summary

Kwenta DAO will enter partnership with Gauntlet to perform risk analysis and ongoing parameter tuning for Quanto Perps.

Abstract

Quanto Perps introduces a lot of parameter surface area that will need to be actively be managed by the council, CCs, and community.

Gauntlet has years of experience in DeFi risk management and specialties in onchain perpetual futures parameter tuning. Gauntlet will aid the council in recommendations and active changes for live system parameters.

The partnership with Gauntlet will be an engagement term over 1 year.

Motivation

With the increased complexities and subsequent risks of building out an in-house protocol, it's important to service ongoing monitoring of risk and adjust parameters accordingly.

Quanto Perps will introduce a wide set of parameters that will need to be managed. For example, parameters like open interest caps, liquidation parameters (buffer, fee ratio, margin), maker & taker fees, funding velocity, and skew scale are all levers that need to be actively managed to balance a strong trading experience with a system protected from tail risk. Acting too aggressively puts LPs at risk and acting too conservatively creates a poor trading experience. The responsibility of parameter tuning is compounded by each market added to the system where each new asset introduces new set of risk into the equation.

In order to aid this management, engaging an experienced and qualified third party risk counsel like Gauntlet is the ideal solution.

Specification

For more information, visit the: Kwenta State Log