Risk Management

Mozaic takes a "Risk First" approach to risk management

Archimedes is an active participant in the volatile crypto market. 'He' processes datasets to formulate a strategy that objectively interprets and responds to changes in price and yield while actively managing risk.

Risk-on, Risk-off...

Archimedes operates in TWO distinct modes:

• 'Risk On' Mode - deploys a higher share of Theseus vault TVL into volatile asset GM Pools.

• 'Risk Off' Mode - prioritises "derisking" by moving a higher share of vault TVL into stablecoin pools.

Risk management approach

When applying its "Risk First" approach, Mozaic recognises and actively manages several key risks when operating Theseus V2, as follows:

• Market risk: Extreme market volatility of prolonged downturns could impact vault performance. Mozaic’s AI continuously adapts the portfolio allocation to balance risk and reward.

• Smart contract risk: Mozaic’s smart contracts have been audited by Trust Security to mitigate this risk.

• Counterparty risk: Mozaic routinely monitors a set of key performance indicators for GMX to ensure the management of the vault’s counterparty exposures.

• Liquidity risk: Sudden changes in liquidity could affect the vault’s ability to enter or exit positions. Strict liquidity thresholds are maintained for all allocated pools.

• Systemic DeFi risk: Broader issues in the DeFi ecosystem could have cascading effects that may impact Theseus. Mozaic employs ongoing monitoring, leveraging tools such as Hypernative, and has contingency plans in place for various scenarios.

Mozaic’s risk management approach combines AI-driven analysis, strict operational protocols, and ongoing human oversight to mitigate these risks and protect user funds.

Risk management is an iterative process - especially in DeFi.

Mozaic is committed to continuously evolving and enhancing its risk management strategies. We regularly review and update our protocol risk controls and consider new market developments, emerging risks, and advances in risk management techniques. This ongoing refinement ensures that our risk management framework remains robust and adaptive over time.