> For the complete documentation index, see [llms.txt](https://nysa-finance.gitbook.io/nysa/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://nysa-finance.gitbook.io/nysa/architecture/risk-framework.md).

# Risk-Framework

### Overview

Nysa deploys lending markets exclusively on battle-tested, pre-existing infrastructure — Aave V3 and Euler V2. Because we curate and configure markets rather than building lending protocols from scratch, our risk surface is fundamentally different from most DeFi projects: the core smart contract risk sits with audited, production-proven codebases, while Nysa's own risk work focuses on secure deployment, quantitative market analysis, and continuous monitoring.

#### General Approach

Every Nysa market follows the same deployment discipline:

1. **Pre-existing, bulletproof infrastructure** — We deploy only on codebases with extensive audit histories, formal verification, public bug bounties, and years of production track record. We do not modify core protocol logic.
2. **Tier-A oracle price feeds only** — Collateral valuation and liquidation triggers rely exclusively on Chainlink and equivalent institutional-grade oracles. No custom or unverified price feeds.
3. **Carefully defined liquidation processes** — Each market's liquidation mechanism is either inherited directly from the underlying protocol or developed and tested in-house, with parameters calibrated through quantitative simulation before deployment.
4. **Continuous monitoring and mitigation** — Once live, every market is monitored in real time through on-chain monitoring systems (OpenZeppelin). Anomalies trigger circuit breakers and incident response procedures.

#### ISO 31000 Alignment

The framework follows the risk management process defined by **ISO 31000**: risk identification, risk analysis, risk evaluation, risk treatment, and continuous monitoring & review. This process is applied across both risk categories below.

#### Risk Categories

Nysa distinguishes two principal categories of risk, each treated through its own dedicated framework:

* **Product Risks** — Risks arising from the protocol as a software artifact: smart contracts, front-end, admin access, and price feed integrity.
* **Market Risks** — Risks arising from each market's financial exposure: volatility, depeg events, insolvency, and redemption liquidity.

The two categories are managed separately — one is an engineering discipline, the other a quantitative finance discipline — but they share the same ISO 31000 process backbone: risks are stated explicitly, measured where measurable, mitigated where they cannot be eliminated, and monitored continuously.

> Nysa Finance is a decentralized lending protocol whose software deployment and maintenance is operated by Hirundo Technologies s.r.l.s. By using the Nysa dApp — through its front-end, smart contracts, or third-party providers — you accept our [Terms of Service.](/nysa/protocol-info/term-of-service.md)