RAMM
  • Introduction
    • Why RAMM
    • Key Terms
    • High-Level Description
    • Fixed Term vs Perpetual
    • Whitepaper
    • Vision
  • Participants
    • Managers
      • User Flow for managers
    • Utilizers
      • User Flow for Utilizers
    • Liquidity Providers
      • User Flow for liquidity providers
    • Validators
  • Protocol Flow
    • Overview
    • Proposal
      • Parameter Details
    • Assessment & Decision Aggregation
    • Post Approval
  • Instrument Examples and Usage
    • Overview
    • Inter-protocol Underwriting Middleware
      • Examples
    • Conditional Lending Pool (CLP)
      • Managers as Oracles
      • longZCB Returns
      • Parameter Details
    • Individual Creditline
      • Mortgage Loans
      • Simple Numerical Example
      • Defaults & Liquidations
    • Stablecoin backed by any collateral
    • Risk Defined & Protected Yield Aggregator
    • Asset Allocation & Portfolio Construction
    • Single Sided Liquidity Provision
    • Managed Structured Products
      • Simple Numerical Example
  • Prediction Market & AMM(technical)
    • Overview
    • Tradable Tranches
    • Instrument Return Oracles
    • Post Approval
    • Decentralized Risk Score
    • Leverage Multiplier
    • Redemption & Valuing longZCB tokens
  • Managers & Reputation
    • Overview
Powered by GitBook
On this page
  1. Prediction Market & AMM(technical)

Decentralized Risk Score

PreviousPost ApprovalNextLeverage Multiplier

Last updated 2 years ago

Probability of Profitability

The probability of profitability(PoP) is a new metric that can be generated by RAMM's prediction market. Whenever a manager buys longZCB, the amount he buys relative to his budget determines his confidence level; his subjective probability of the event that an instrument is profitable. Managers' subjective probability can be aggregated to compute a crowd's PoP.

A higher PoP is a necessity for an instrument to be approved. It also serves as a quantitative tool that informs the vault's passive investors of the amount of risk they are taking when investing in the vault.

More information and derivation can be found in the .

whitepaper