Overview

Risk in DeFi is real, and it's different. Traditional finance has decades of data, strict regulations, and established credit ratings to measure and manage risk. DeFi doesn’t. Most protocols are less than five years old. Their code is public, and control often lies with DAOs or anonymous teams.

That's why we built our proprietary risk assessment and management framework we use at Shift to evaluate and manage risk when legacy models fall short.

Our risk assessment and management framework bridges the data gap in DeFi. It combines quantitative and qualitative methods to identify, classify, and address risks that could lead to capital loss. It's the foundation of our risk approach — first developed for institutional portfolios, now at the core of the Shift platform.

The framework is built on two components:

• Risk assessment, which analyzes potential threats

• Risk management, which handles how we respond when things change

Both rely on purpose-built tools and models that help us act quickly, stay transparent, and protect user capital.

Next, we’ll look at how the framework works in practice.