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Enterprise Ethereum Alliance (EEA) has unveiled guidelines to help assess risks in DeFi protocols
The guidelines work for developers, users, regulators and investors
The guidelines also include ways to address DeFi risks
The Enterprise Ethereum Alliance whose members include blockchain security firms like CertiK and blockchain development entities like Consensys has released a document detailing how regulators, investors, developers and users can assess and mitigate DeFi risks. Titled “EEA DeFi Risk Assessment Guidelines – Version 1,” the document intends to solve the “general lack of accounting standards and guidance for DeFi,” because the alliance thinks the sector operates under ambiguous rules. The alliance is also inviting views from regulators, something that will help streamline laws governing the DeFi sector.
User Feedback is Critical
According to the document, some of the major risks plaguing the DeFi world include software, governance, legal, credit and market risks. The EEA believes these risks can be mitigated by employing the best practices in each category. Legal risks, for example, can be addressed by DeFi protocols joining industry groups and implementing KYC measures.
The document also outlines user feedback as critical to identifying risks ranging from “deficiencies in frontend design” to a protocol being under attack. EEA intends to keep updating the guidelines to keep up with the changing DeFi landscape.
EEA isn’t the only alliance working to bring regulatory sanity to the DeFi space. Three years ago, for example, notable figures in the crypto industry formed The DeFi Alliance to address DeFi regulations.
More Web3 Alliances Formed
Other alliances have also cropped up to address other aspects of the web3 world. The Proof of Stake Alliance and Security Alliance have been formed to develop rules to govern staking and web3 security respectively.
With the unveiling of guidelines to assess and mitigate DeFi risks, it’s to be seen whether financial regulators will rely on the document when formulating laws that affect the DeFi world.
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