Asset Risk

The composability of the DeFi ecosystem implies risks from an individual component flow into all dependent systems. Token are at the heart of Paddle's loan market as they enable operations and cash flow, and lay the foundation for assets/ liabilities structure of the whole financial system.

To mitigate systemic risk, Paddle’s Risk Management Team has developed a Token Risk Assessment Framework. This evaluates each supported token based on:

• Underlying asset quality and volatility

• Counterparty risk

• Market-level risks (e.g., liquidity, concentration, composability)

Our goal is to maintain one of the highest risk standards in DeFi, ensuring only secure and reliable assets are integrated into the protocol.