Stress Testing Framework
This section outlines OLTA’s approach to testing fund and protocol resilience under adverse or extreme market conditions.
Purpose
Stress testing allows OLTA to identify vulnerabilities in index construction, NAV stability, liquidity assumptions, and smart contract performance by simulating rare but plausible adverse scenarios.
These tests enhance confidence for institutional users and support risk-adjusted governance decisions.
Core Components
Market Shock Simulations
Simulated scenarios include:
Sudden drawdowns (e.g., -40% within 24h)
Flash crashes on key assets
Systemic contagion across correlated tokens
Volatility clustering events (multi-day turbulence)
2. Depeg and Stablecoin Failure Models
Partial or full depeg of USDC
Multi-day freeze on redemptions
Sudden shift to backup collateral models
3. Liquidity Drainage Stress
Volume spikes with slippage recalculation
Execution under thin books (DEX/CEX simulations)
Asset delistings or unavailable oracles
4. Smart Contract Resilience
Gas spikes during scheduled rebalancing
Congestion or oracle failure during NAV updates
Failure simulations of emergency exit paths
5. Governance Reaction Speed Tests
Timing of DAO-based responses to emergencies
Delay buffers vs. mitigation urgency
Methodology
Use of historical event replay (e.g., FTX collapse, March 2020 crash)
Forward-looking scenario construction informed by macroeconomic stressors
Use of both on-chain analytics and off-chain data feeds (e.g., volatility indexes, market depth)
Simulation environments integrated into OLTA’s internal risk suite (non-user-facing)
Frequency and Disclosure
Performed quarterly or before major protocol upgrades
Summary results may be included in risk disclosures and factsheets
Material vulnerabilities trigger internal alerts and mitigation reviews
By embedding systematic stress testing into its operational cadence, OLTA enhances its capacity to withstand market instability while upholding institutional-grade transparency and risk discipline.
Last updated