MGP-2 Warden Finance Risk & Tooling Grant Proposal

Title: Warden Finance Risk & Tooling Grant Proposal Author(s): Hugo Boisselle-Morin hugo@shippooor.xyz Related Discussions: - https://forum.moonwell.fi/t/mip-39-activate-moonwell-on-base-mainnet/414 Submission Date: 2023-04-03

Summary

This proposal aims to formalize how Warden would support Moonwell in the following areas:

• Tooling and infrastructure - Support Moonwell Artemis, Apollo and Moonwell on Base chain on the Warden Finance risk & analytics platform, giving free access to advanced protocol exploration and risk tooling to the community.
• Risk management service - Governance parameters recommendations and help with onboarding Moonwell on Base chain

We have discussed this proposal with contributors from Lunar Labs. This proposal aims to create additional risk tooling for the community and further decentralize Moonwell’s risk management.

Overview

Tooling and infrastructure

By giving Moonwell users access to the Warden Finance risk & analytics platform, the community will have access to the following capabilities:

Explore

• Search and browse everything (link) - Explore all Moonwell accounts, complete transactions history and liquidations through a smooth UI and powerful search, filter and sort capabilities. Here are a few concrete examples:
  • Search accounts by strategy (i.e long USDC and short ETH)
  • Filter transactions by specific asset and date range (i.e USDC liquidations during depeg event).
• In-depth account details (link)- Access details about any account’s health and history. See any account’s historical net worth, profit & loss, portfolio, health metrics and liquidation prices for all assets in the portfolio.

Simulate

• Self-serve risk management - Measure the exact impact of any market conditions and governance parameter change on your account’s health using the Warden simulation engine.
• Risk manager tooling (link) - Open access to the tools that our team uses to measure risk and provide recommendations. (Liquidation prices, Collateral at Risk, Liquidation Backtesting, Asset Risk Assessments)
• Asset onboarding and monitoring dashboards (link) - For every major assets on Moonbeam. Moonriver and Base, measure the following risk metrics in real time:
  • Oracle price vs market price feed
  • Volatility metrics (i.e max downturn, daily volatility)
  • Slippage
  • List of all dex pools
  • Historical dex liquidity
  • Holders concentration.

Risk management service

In complement to the tooling, the Warden Finance team is proposing to offer the following services:

• Propose governance parameter recommendations for CF, IRMs, borrow and supply caps that aim to provide a trade-off between the two following poles:
  1. Improve market efficiency
  2. Maintain level of risk exposure that is desirable by the community
• Review parameter recommendations from other contributors such as Gauntlet by assessing the output against our model.
• Publish a full analysis recommending an initial set of assets and parameters for onboarding Moonwell on Base chain.

Motivation

How this proposal will help Moonwell

The end goal of this proposal is to help improve the Moonwell ecosystem in the following areas: risk management, transparency and decentralization

Risk Management

Through our service and platform, we aim to improve market efficiency and have better control over risk, which we think is a clear benefit for the community. Our platform is free for everyone to use, allowing anyone in the community to run simulations, identify risk vectors and easily quantify those risks.

Transparency

The platform gives the community access to the complete picture of the Moonwell Apollo and Artemis systems through a comprehensive user experience. It also allows understanding how risk may impact one’s portfolio in a way humans can comprehend.

Decentralization

The tools are available to everyone for free so anyone can use them to propose risk parameter updates and measure the impact of any proposed change. Warden empowers everyone in the DeFi community to make data-driven risk decisions.

About Warden Finance

Warden helps DeFi protocols identify and manage risks. With the help of our open risk & analytics platform, we propose parameter recommendations based on our in-house research, participate in governance, and build custom risk tools.

Warden has been contributing to DeFi since 2021. So far, we have collaborated with Euler, Notional, Morpho, Compound, AAVE, Uniswap, Instadapp and Olympus protocols. We started as builders, helping protocols surface data in a meaningful way through an extensive set of dashboards, subgraphs and data extraction tools.

• Warden Finance - Risk & Analytics Platform for DeFi
• Dune Analytics Dashboards
• Notional Info Dashboard
• Uniswap Subgraph Extractor
• Euler Sugraph

The Warden Finance platform was released in Q4 2022 as part of a risk & tooling partnership with the Euler protocol.

The platform encompasses a set of tools for exploring DeFi accounts, running simulations, backtesting strategies and stress-testing protocols. Warden empowers everyone in the DeFi community to make data-driven risk decisions.

We also are active DAO contributors and delegates. We are delegates on Morpho and Euler. We review governance proposals and provide recommendations for our areas of expertise (tech, risk, data science). We are active forum contributors. Here are a few recent notable contributions:

• Euler - eIP 47 - Promote rETH to collateral tier
• Euler - eIP 52 - Update IRM models for wstETH, cbETH & rETH
• Euler - Stablecoin Depeg Event Thread

Our Values

Transparency. In the best interest of the community, our platform will always be accessible and open for feedback. We have created tools that are accessible to the public in order to make our proposals as transparent and cohesive as possible.

Data-driven. Every recommendation we make is based on cold hard data that is accessible and verifiable by anyone. Through the Warden Finance platform, we carry a holistic picture of the protocol and can accurately measure the impact of any change in the system.

Quality. Risk management is mission critical for protocols, and we believe the tools and recommendations should live up to that standard. We build products that are made to be used and meant to be trusted.

Implementation

Tooling and infrastructure

The Warden Finance team will take charge of implementing the Moonwell Apollo, Artemis and Base integration to the Warden Finance platform.

The team will also take care of hosting, maintenance and support for the users.

Risk management service

Monthly risk assessment reports & recommendations reviews

We will provide recommendations on a monthly basis for the following parameters:

• Collateral factor
• Borrow cap
• Liquidation incentive / close factor
• Interest Rate Models (base rate, kink rate, max rate, kink utilization, reserve fees)
• Treasury (harvesting decisions & adjacent recommendations)

We will review recommendations from other contributors such as Gauntlet by assessing the output against our model, and provide adjustments if needed.

Onboarding Moonwell on Base

In order to help Moonwell with bootstrapping on Base, we will publish a full analysis providing the following recommendations:

• Suggested set of assets to be onboarded, along with an analysis of all of the risk-related metrics for each of them (oracles, volatility, slippage, dex liquidity, …)
• Recommended parameters for each of those assets

Budget and timeline

Timeline: Moonwell Artemis and Apollo integrations on the Warden Finance platform will be available within 4 weeks after the proposal is accepted.

Budget: $62.5k per quarter. With the first payment paid up front to cover for initial development costs.

Period: Mar 2023 to Mar 2024 (1 year)

We are a team of three (Hugo Boisselle-Morin, David Dallaire & Philippe Labrecque) with deep experience in crypto, tech, and finance. The proposed grant will cover infrastructure cost ($5K per month to run our simulation platform) as well as contributors' time and expertise.

We will post quarterly updates on what we have delivered to the DAO and post monthly risk assessments on the Forum.

Review period

We propose a 3 month review period where the DAO can terminate the engagement if it is not satisfied by our performance. Given our track record and past contributions we think it is unlikely that such action should be taken.

Voting

• Yes - I approve the above proposal
• No - I refuse the above proposal