This directory contains Yearn's risk assessment framework for evaluating protocols and assets before integration with Yearn vaults.
The risk framework provides a structured approach to evaluating the safety and reliability of DeFi protocols and assets. It covers technical, operational, and organizational risks that could impact user funds.
All assessments—protocols, assets, tokens—use the same template and scoring methodology.
reports/
├── TEMPLATE.md # Risk assessment template (includes scoring rubrics)
├── README.md # This file
├── report/ # All risk assessments
│ ├── reserve-ethplus.md # Example: ETH+ asset
│ ├── origin-arm.md # Example: Origin ARM protocol
│ ├── infinifi.md # Example: InfiniFi protocol
│ └── ...
└── old/ # Legacy documentation (deprecated format)
Legacy documents are in reports/old/ for reference only. Do not use them as templates.
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Copy the Template
cp reports/TEMPLATE.md reports/report/[name].md
-
Fill Out Each Section
- Work through each category systematically
- Provide evidence and links for claims (Etherscan links, documentation)
- Be specific with addresses, transaction hashes, and dates
- Sections marked
[Required]must be completed;[If Applicable]sections can be skipped - Flag unknowns as TODO rather than assuming
-
Calculate Risk Score
- The scoring rubrics are embedded in the template itself
- Check critical gates first (auto-fail criteria)
- Score each category, then compute the weighted final score
- Document reasoning for each category score
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Review and Update
- Have another team member review the assessment
- Update when protocol parameters change
- Reassess based on triggers defined in the report
The template is self-contained with embedded scoring rubrics. Reports follow this structure:
- Analysis Sections - Investigation and evidence gathering
- Overview, Audits, Historical Track Record, Funds Management, Liquidity Risk, Centralization & Control, Operational Risk, Monitoring
- Risk Summary - Synthesis of key strengths, risks, and critical concerns
- Risk Score Assessment - Critical gates check, category scoring (1-5 scale), weighted final score, and risk tier classification
- Reassessment Triggers - Conditions that warrant re-evaluation
| Category | Weight | What it evaluates |
|---|---|---|
| Audits & Historical Track Record | 20% | Security posture, code quality, past performance |
| Centralization & Control Risks | 30% | Governance, programmability, external dependencies |
| Funds Management | 30% | Collateralization, provability, asset control |
| Liquidity Risk | 15% | Exit mechanisms and market depth |
| Operational Risk | 5% | Team, documentation, and processes |
Each category receives a score from 1-5 (1 = safest, 5 = highest risk), which are then weighted to produce a final risk score and tier classification.
- Evidence-Based: Link to contracts, transactions, and documentation
- Transparent: Document both strengths and weaknesses
- Actionable: Focus on risks that can be monitored or mitigated
- Living Document: Update report as protocols evolve
Technical Safety
- Audited and battle-tested code
- Onchain verifiability of reserves
- Programmatic operations (minimal admin intervention)
- Robust liquidation and peg stability mechanisms
Organizational Maturity
- Transparent team and operations
- Strong documentation and communication
- Proven incident response capabilities
Systemic Resilience
- Limited dependencies on external protocols
- Adequate liquidity for user exits
- Decentralized governance with appropriate safeguards
- Monitoring and alerting systems in place
- Unverified contract source (bytecode cannot be independently reviewed)
- Unaudited or poorly audited code
- Unlimited admin powers without timelocks
- Opaque reserves or offchain dependencies
- History of incidents with poor response
- Insufficient liquidity for expected TVL
- Single points of failure in critical infrastructure