risk-assessment

name	risk-assessment
description	Portfolio-wide risk assessment and management. Use when evaluating overall risk exposure, before major trades, or during market volatility.

Risk Assessment Framework

When to Use

• Before any trade >10% of domain balance
• Daily portfolio review
• During high volatility periods
• After significant losses

Risk Metrics to Monitor

Position-Level Risk

• Individual position size vs balance
• Leverage used (perps)
• Liquidation distance (perps)
• IL exposure (DLMM)
• Time to resolution (polymarket)

Portfolio-Level Risk

• Total capital at risk
• Correlation between positions
• Concentration in single asset/event
• Cash buffer available

Market-Level Risk

• Overall crypto market trend
• Volatility regime (VIX equivalent)
• Funding rates across perps
• Liquidity conditions

Risk Limits

Hard Limits (Never Exceed)

• Single position: 20% of domain balance
• Single domain: 40% of total portfolio
• Total leverage exposure: 2x portfolio value
• Cash buffer: Always keep 10% liquid

Soft Limits (Require Justification)

• Correlated positions: 30% of portfolio
• Same asset across domains: 25% of portfolio
• High-risk positions (memes, high leverage): 15% of portfolio

Risk Scenarios

Scenario 1: Market Crash (-30%)

Calculate impact on each position:

• DLMM: IL + potential LP loss
• Perps: Liquidation risk
• Polymarket: Usually uncorrelated
• Spot: Full exposure to drop

Scenario 2: Flash Crash (-50% then recovery)

• Perps positions likely liquidated
• DLMM IL crystalized if panic removed
• Spot depends on if held or panic sold

Scenario 3: Specific Asset Collapse

• How much exposure to that asset across all domains?
• If >20% portfolio, overexposed

Risk Reduction Actions

Immediate (Crisis Mode)

• Close all leveraged positions
• Remove concentrated liquidity
• Move to stables
• Wait for clarity

Gradual (Risk Management)

• Reduce position sizes by 50%
• Lower leverage
• Widen DLMM ranges
• Add stop losses

Preventive (Before Risk Events)

• No new positions before known volatility events
• Reduce leverage ahead of announcements
• Keep higher cash buffer
• Avoid illiquid positions

Daily Risk Checklist

• Total portfolio value calculated
• Per-domain allocation checked
• No position >20% of domain
• Perps liquidation prices reviewed
• Market conditions assessed
• Upcoming risk events identified
• Cash buffer adequate (>10%)

When to Stop Trading

Pause Conditions

• Portfolio down >10% in single day
• 3+ consecutive losing trades
• High uncertainty about market direction
• Personal emotional state compromised

Resume Conditions

• Market stabilized
• Clear thesis for next trade
• Position sizes reduced
• Risk limits re-established