TIP Number and Title:
TIP-091: Onboard Anthias Labs as Risk Partner for Threshold Network
Vote Type:
Token holder DAO Snapshot with a 7-day vote period
DAO Elected Representative Sponsor:
Summary:
Anthias proposes a 3-month risk partner engagement with the Threshold DAO. This 3-month engagement will involve a variety of risk and research services, with a particular focus on risk assessments, risk monitoring, and active governance work for collateral integrations and other protocol synergies for tBTC and thUSD.
Background:
Anthias Labs has been working with the Threshold DAO for the past 1 - 2 months on risk analysis and tBTC collateral onboarding. Specifically, we have been working with @eh_ethan and @sap on the tBTC collateral asset risk analysis that we shared on Twitter here as well as tBTC collateral asset onboarding for Radiant Capital. The forum post can be viewed here.
During this month, we have demonstrated our full alignment to the mission of Threshold and our commitment to the Threshold DAO. We have found that there is more work to accomplish with the DAO over the next 3 - 6 months, especially as the market for BTC solutions becomes increasingly competitive. Our team is looking to offer our services more concretely to the DAO.
Why a Risk Manager:
The job of a risk manager is simple: 1) deeply understand the bad events (risk vectors) that a protocol is exposed to, 2) monitor for signs to ensure that the bad events don’t happen, 3) take measures to minimize the probability of the bad events (e.g parameter changes), and 4) minimize damage if the bad events happen.
Furthermore, Anthias publishes monthly analysis as we monitor a protocol - we can use and repurpose these materials to strengthen Threshold’s brand if it’s a priority to be perceived as risk-conscious and security-conscious.
Some specific areas of work:
- Provide observability on relevant risk metrics for tBTC and thUSD
- Conduct analysis on tBTC and thUSD as savings vehicles and collateral vehicles
- Facilitate tBTC and thUSD protocol integrations
- Provide a risk perspective to influence tBTC’s and thUSD’s product strategy
- Provide incidence response during periods of volatility, elevated risk, or uncertainty
- Build Threshold’s public brand presence from a risk perspective using the produced risk-focused materials
- Our work on alternative BTC solution risk assessments (uniBTC, cbBTC, etc) will inevitably provide benefit for other BTCfi-adjacent protocols like Acre and Mezo that will then drive value back to Threshold.
Why Anthias Labs:
Anthias Labs is a boutique on-chain advisory firm focused on DeFi risk management and system design. We’ve worked with Aave, Compound, Euler, Exactly and more. We also work directly with DAO ecosystems on ecosystem development. These partners include the Solana Foundation, the Uniswap Foundation, Arbitrum DAO, and Optimism Collective.
We take a hands-on approach to risk management and system design by working closely with our partners. We have helped our clients navigate asset depeggings, liquidation cascades, flash crashes, and more. We only work with a handful of clients at a time.
References + Past Work Examples:
- tBTC vs WBTC: Asset Listing Analysis by Anthias Labs Tweet: In September of 2024, Anthias Labs released our full system / risk analysis report of tBTC vs WBTC.
- Anthias Labs tBTC Radiant Collateral Onboarding Proposal: In September of 2024, Anthias Labs published the linked tBTC collateral onboarding proposal to the Radiant governance forum.
- Anthias Liquip Paper: In June of 2023, the Anthias team released the new risk measurement and management methodology we had been working on for nearly six months: the Anthias Liquip Paper. LP Volatility Study: In March of 2024, the Anthias Labs team released a comprehensive report on the modern landscape of AMM’s.
- Argo Network: Anthias Labs launched Argo Network earlier this year. Through Argo, our team works closely with a number of LRT Protocols, Actively Validated Services (AVSs), and Node Operators on areas including risk and data analysis.
First set of deliverables:
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In-depth risk audits of tBTC and thUSD - From our initial tBTC vs WBTC risk analysis, we identified three primary risk vectors for tBTC: custodian risk, technical risk, and system risk as a result of operator collusion. The first deliverable of the Anthias Labs x Threshold partnership would be a more rigorous and in-depth risk audit of thUSD and tBTC to better illuminate each risk vector, the causes and effects that might lead to risk-on situations, how to monitor these situations, and how to manage these situations when they do arise. These two risk assessments will focus on how tBTC and thUSD can ensure that they are two of the most resilient assets in DeFi and understand the key risk vectors that could cause a black swan event in either of these assets. These two risk assessments will inform the next deliverable, which will be the development of the monitoring platform.
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Active Advisory and Risk Monitoring for both tBTC and thUSD - The purpose of the monitoring is to begin investing more efforts into building out risk and security for Threshold, as the protocol matures and scales. The risk assessments will most clearly help our team to define the data points that would affect those risk vectors, but an initial estimation would be the following: 1) decentralization / censorship of operators over time, 2) tBTC + thUSD collateral-at-risk for lending markets and 3) tBTC + thUSD DEX liquidity health. The findings here will probably affect the next few weeks of work and the subsequent deliverables we provide to the DAO, all fitting with the General Scope of Service outlined below.
General Scope of Service:
Anthias will serve as a risk partner for the Threshold DAO. That will include but not be limited to the following scope items after the first set of deliverables is complete:
- On-demand risk assessments - As risk partner for the DAO, we will provide on-demand risk assessments for DAO proposals and ideas brought to the Threshold forum. We will review proposals that come through the Threshold governance forum if requested from a risk perspective and make recommendations / suggestions on their implementation, risk profile, and more so that the DAO can more accurately assess the security of these proposals.
A few examples of past risk recommendations and frameworks we have created for current and previous Anthias Labs partners:
a. Notional GMX collateral asset onboarding - This proposal outlines our suggestion to list GMX as collateral on Notional, which was subsequently passed by the DAO via Snapshot.
b. Notional cbETH collateral asset onboarding - This proposal outlines our suggestion to list cbETH as collateral on Notional, which was subsequently passed by the DAO via Snapshot.
c. Frax adjustment to IRM parameterization - This proposal outlines an update to Fraxlend’s IRM via an increase in base rate
d. Euler Snapshot for the recommendation of risk tooling for Value at Risk modeling for the DAO - This proposal is a Snapshot of our recommendation to build Value at Risk simulation tools for Euler for improved economic risk management
e. Euler Snapshot to build monitoring system for the DAO - This proposal shows our approval to build a full risk monitoring and alert system for Euler users, voted through by the DAO.
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Risk Monitoring: We will monitor risks across the DAO, with an emphasis on three primary focuses: 1) decentralization / censorship of operators over time and 2) tBTC/thUSD collateral-at-risk for lending markets and 3) tBTC + thUSD DEX liquidity health. In the future, this can be formalized into a monitoring system if the DAO believes this is valuable - a full monitoring platform would be outside the scope of the initial engagement but may be something to consider later.
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Active Governance: As we have demonstrated via the other DAOs we work with like Optimism [link to our forum activity here], we will be active forum participants and an active voice within the DAO.
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Anthias Advisory & Incident Response: Our team is available for ad-hoc requests. In particular, our risk focus has been relevant as teams are making key decisions within their product / business roadmaps. Furthermore, DeFi inevitably entails uncertain scenarios (e.g Maker’s Black Thursday), which require careful and well-informed navigation that the Anthias team will assist and support.
Communications:
- Our team will foster transparency and community engagement by sharing recommendations and analyses through dedicated governance forum discussions to the Threshold forum. We are committed to providing monthly updates that highlight our accomplishments within the DAO and outline our future plans.
- We will also attend community calls. Here we will focus on addressing risk concerns, discussing ongoing proposals, and gathering valuable feedback.
Accountability:
We recommend the following reporting path:
- Oversight by the IG to align with growth efforts (Ethan)
- Regular TTG meetings to share updates.
Compensation:
- 2-month engagement, Oct 15, 2024 - Jan 15, 2025
- $16,000/month paid in T to anthiaslabs.eth at the end of each month during the 3 month period
Next Steps:
- 5 days for comment / discussion on this proposal
- Token holder DAO Snapshot with a 7-day vote period
- Anthias Labs to take up risk partner role and begin execution of Scope within 3 days of Snapshot conclusion
Disclaimer(s):
Note: Some links were not shown in this proposal because the forum only accepts a certain amount of links in a new post, but please reach out to us if you would like to view other links.
Anthias LLC (D.B.A. Anthias Labs) does not provide financial advice. Any information accepted here or in any other post/statement/comment made by Anthias Labs or an Anthias Labs team member is accepted on the behest of the protocol team / Threshold DAO. Anthias Labs is not permitted to give financial advice, and nothing in this documentation or any other documentation or text produced by Anthias Labs should be considered as such. Anthias LLC (D.B.A. Anthias Labs) will not be held liable for any economic or otherwise monetary loss brought about by statements made in this document. This is not financial advice, and any third party reading any document provided by members of the Anthias LLC team should do its own research into any statement made.