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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