This section covers mainly the risks associated with the assets supported in the ParaSpace protocol. Risks are based on market, counter-party, and smart-contract risks for all of the assets selected for supplying and borrowing within the protocol.
The risk profiles for the ERC-20 assets on ParaSpace are derived from the Aave risk assessment. Aave has been the leader in developing risk frameworks for the decentralized lending and borrowing of ERC-20 assets and we are building off of their foundational work in the space.
The risk profiles for ERC-721 tokens are inspired by the same Aave risk assessments and ultimately derived via ParaSpace data analysis.