Risk Management

Risk management of digital assets is multi-faceted - and requires particular vigilance. As such, it forms an integral part of our investment strategies. We have put in place clear processes to address each element of risk throughout the investment cycle.

Focus on Low Drawdowns

Drawdowns are kept at a minimum to limit lost profits. Constraints such as maximum allocation per trading model, per direction, per instrument, are built into our strategies, together with a broad range of hard-coded rules. All positions are protected by targeted stop losses. 

Exposure Constraints

Our strategies include exposure to a single or multiple digital assets. We are able to customise our offering according to the client's needs.

Market Risk

DFi Labs is exclusively involved with algorithmic trading. This means that market risk management must be an integral part of our trading strategies. Leveraged products are more difficult to manage from a market risk management standpoint as compared to unleveraged products. Market risk is primarily managed through two mechanisms across our products:

  • Limits on position size.

  • Stop-limits triggered by large market moves.

Trading System Risk

When algorithms are managing capital, one must make sure to avoid performance detrimental bugs. Therefore, we perform extensive testing before deploying any algorithm/strategy into production.

Liquidity Risk

We only invest in highly liquid assets. It takes us a very short time to liquidate 100% of your assets.

Counterparty Risk

We perform thorough due diligence on each of our counterparts and only collaborate with reputable partners.