Risk management as Code - Making Rules Programmable in DeFi
TradFi compliance officers rely on manuals, memos, and human interpretation. DeFi can do better; Turn risk policies into executable code.
In TradFi, compliance lives in binders. In DeFi, it should live in smart contracts.
The Risks
Inconsistent KYC: Different pools, different processes.
Manual approvals: Slows down liquidity flows.
Jurisdictional confusion: “Accredited” means one thing in the U.S., another in the EU.
Why This Matters
Institutions need predictability. If compliance can’t be automated, scale is impossible.
The Policy Engine Model
flowchart TD
A[Policy Engine] --> B{Rule: Accredited only?}
B -->|Yes| C[Allow deposit to RWA Pool]
B -->|No| D[Reject tx]
Codify rules as on-chain eligibility checks.
Example: “Only wallets with Accredited Investor token may deposit in RWA Pool.”
Rules are transparent, testable, and enforceable.
Tools
Policy Engine contracts (eligibility as a function).
Trust Registries (who counts as an issuer of credentials).
Identity Adapters (bridge ERC-5484 SBTs / CIP-113 tokens into policy checks).
Risk management as Code
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