Abstract
Venus continues to face challenges with underutilized markets and slow parameter adjustments. To address this, Anthias and Adrastia are jointly proposing a collaborative risk management framework for Venus across Ethereum, opBNB, Arbitrum, ZkSync, Optimism, Base, and Unichain. The proposal includes implementation of Adrastia’s PID-Hybrid Interest Rate Controller, Supply & Borrow Cap Controller, Collateral Factor Controller, XVS Emissions Controller, and Credit Extension Oracles on all currently supported chains except Ethereum, where manual risk management will continue due to gas cost constraints. While BNB Chain is out of this initial scope as Chaos Labs covers it, we hope to support it in the future after demonstrating value and expertise to the DAO.
About Anthias Labs
Anthias Labs is a boutique on-chain advisory firm focused on DeFi risk management and system design founded in 2022. We protect protocols with mission-critical risk infrastructure and advisory. Anthias’ partners have included Felix Protocol, Arbitrum DAO, Uniswap and more. We have supported these with technical research, open source development, and custom monitoring systems. We take an approach to risk management that prioritizes a small handful of clients at a time, with whom we are able to work at great depth, as opposed to overly splitting focus. Risk is an on-the-ball business, so our focus is to dedicate ourselves fully to the partners we work with.
Selected Anthias work includes:
- DEX liquidity pool asset ratio optimization research
- Native asset staking hub risk management
- LP condition simulation tooling
- Longform risk analysis on critical decentralization operations
- Qualitative and quantitative RWA risk analysis
About Adrastia
Adrastia is a provider of oracle, controller, and automation infrastructure for DeFi protocols, focused on enhancing the security, efficiency, and reliability of on-chain systems. Our mission is to equip DAOs and protocol teams with tools that improve capital efficiency, minimize risk, and reduce operational overhead.
While Adrastia has a growing footprint, our solutions have already demonstrated real-world success. Ionic integrated our PID-Hybrid Interest Rate Controller to manage borrow rates for stablecoins and WETH in its markets on Mode. The controller successfully maintained optimal utilization levels while supporting over $10M in active loans backed by a peak of $200M in collateral.
We also operate mission-critical oracle infrastructure, including:
- Pyth price feeds for the Galxe Gravity blockchain
- Chainlink Data Streams for World Chain
Adrastia also provides high-performance, reliable trading automation for Oku, ensuring consistent execution across on-chain markets.
Adrastia has earned a reputation for exceptional reliability and performance—delivering infrastructure that protocols can depend on, even under the most demanding on-chain conditions. We take transparency seriously, showcasing our infrastructure’s behavior and uptime through rigorous public performance dashboards and continuous monitoring.
Partnership Scope
As risk partners for Venus’s markets, we will be focused on the following:
Market Parameterization / Param Monitoring via Anthias x Venus Risk Platform
- Collateral Factors
- Supply Caps
- Borrow Caps
- Liquidation Incentives
- Oracle monitoring
- Assessment of parameters for Adrastia risk tooling
Risk Recommendations for New Asset Listing
Risk analysis and risk parameter recommendations for new asset listing proposals for all assets proposed to the Venus forum that pass a temperature check
Timing: To be delivered within 72 hours of temp check pass
Analysis of Ad Hoc Proposals - Venus Governance Forum
Analysis of proposals brought to the Venus Governance Forum on topics that pertain to protocol risk but may not be directly related to one of the parameters listed above.
Timing: To be delivered as appropriate, typically within 72 hours of post for relevant proposal
Crisis Management
Finally, a key part of DAO risk management is serving as a party to mitigate damage in a crisis scenario like an asset depeg or overall market downturn. Anthias has helped protocols navigate multiple of these situations including the Terra/Luna collapse, ezETH depeg, and Jelly/Jelly attack on Hyperliquid.
Timing: Anthias will be there within hours or less to support the DAO navigate any crisis situation
Adrastia and Anthias: Uniting State-of-the-Art Risk Tooling with Risk Management
The Utilization Problem
Venus markets are underutilized due to misconfigured interest rate models that demand excessively high borrow rates at or near optimal utilization levels. This discourages borrowing, suppresses demand, and widens the spread between supply and borrow rates. As a result, borrowers pay too much, lenders receive too little, and capital sits idle—hurting both protocol revenue and long-term growth.
To address this, Adrastia recently introduced The Market Utilization Problem & Adrastia’s PID-Hybrid Interest Rate Controller—a dynamic, feedback-driven system designed to adjust interest rates in real time and maintain healthy utilization levels.
But optimizing interest rates alone isn’t enough. To fully unlock capital efficiency and safeguard protocol solvency, Venus must also manage collateral factors, caps, and oracle-driven price inputs with similar precision. This follow-up proposal expands the toolkit with coordinated parameter management systems—developed by Adrastia and leveraging Anthias’s risk management expertise—to bring responsive, risk-aware automation to the Venus DAO.
Supply & Borrow Cap Controller
The Adrastia Prudentia Supply & Borrow Cap Controller enables Venus to enforce governance-defined rate limits on how quickly supply and borrow caps can change. It allows for controlled market scaling, safer onboarding of liquidity, and rapid—but bounded—responses to changing conditions.
Governance Control
Protocol governance retains full authority over the controller. For each market, governance can define:
- The minimum cap (floor),
- The maximum cap (ceiling),
- The maximum rate-of-change over time.
These guardrails ensure that delegated adjustments by risk managers and automated systems remain strictly within governance-approved boundaries.
Data-Informed Cap Scaling
Cap updates are informed by Adrastia’s time-weighted average (TWA) oracles for total supply and borrow. These oracles provide smoothened usage data that captures actual market demand over time.
Based on this TWA data, risk managers can:
- Set a max cap for each market,
- Configure a daily increase allowance using a linear growth scalar.
For example, a scalar of 1.10 allows the cap to grow by up to 10% per day (based on the 24-hour average supply or borrow level), up to the maximum defined by either the risk manager or the protocol. This prevents sudden jumps while allowing gradual, controlled market expansion as demand increases.
Risk-Aware Flexibility
With this system:
- Caps can increase smoothly alongside usage, without exposing the protocol to runaway growth.
- Caps can be lowered quickly in response to emerging risk.
All changes are transparent and rate-limited, giving governance and the community full visibility into behavior.
By keeping supply and borrow caps aligned with real demand, the controller ensures that interest rate adjustments—like those from the PID-Hybrid Interest Rate Controller—remain effective and are not undermined by outdated or overly restrictive ceilings. The inclusion of tight, configurable daily increase allowances gives risk managers a precise mechanism to scale markets gradually and control growth-related risk. At the same time, it enables responsive, data-informed expansion under strict governance-defined limits—without burdening the DAO with constant intervention.
Collateral Factor Controller
The Adrastia Prudentia Collateral Factor Controller allows Venus to safely and efficiently manage collateral factors (CFs) using governance-defined guardrails and rate limits. It introduces a structured, transparent process for adjusting CFs—enabling fine-grained risk management without requiring a new proposal for every minor change.
Governance Control
Protocol governance retains full authority over all key parameters:
- The minimum and maximum permitted CF for each asset,
- The maximum rate-of-change over time,
Whether risk managers are permitted to make bounded changes.
These constraints ensure that all CF adjustments—whether made by automation or risk managers—remain within clearly defined, protocol-approved limits.
Step-Wise, Rate-Limited Adjustments
Rather than requiring separate proposals for each incremental change, the controller supports step-wise updates over time.
For example, governance may allow a CF to change by up to 0.25% per day, bounded between a minimum of 75% and a maximum of 85%. Risk managers may set the CF anywhere within this range, subject to the configured rate limit.
This gradual adjustment mechanism avoids sudden shocks and allows the protocol to respond more precisely to evolving market conditions.
Risk-Aware Delegation
Governance may optionally delegate limited CF adjustment authority to risk managers, allowing them to operate within the protocol’s defined guardrails:
- All CF changes are fully transparent, logged, and rate-limited.
- Delegation can be revoked or paused at any time by governance.
This enables real-time responsiveness during periods of volatility while maintaining strong oversight and accountability.
Enhanced Responsiveness, Minimal Governance Overhead
With this controller, the Venus DAO gains tight, real-time control over one of its most important risk levers—without the burden of constant proposals. Risk managers can act quickly and responsibly within governance-defined bounds, enabling smarter market management and stronger protocol resilience.
Credit Extension Oracles (CEOs)
Credit Extension Oracles (CEOs) are specialized oracles designed to smoothen out short-term volatility and reduce risk during the loan issuance process. They introduce a time-sensitive buffer around asset valuations, enabling Venus to issue loans more conservatively during periods of market turbulence, temporary price dislocation, or manipulation.
Today, Venus—like most lending protocols—uses a single oracle for both loan issuance and liquidations. This creates a tradeoff: the real-time pricing needed for accurate liquidations can expose the protocol to excess risk during loan issuance, especially amid short-term volatility or manipulation.
This proposal introduces a separation of responsibilities. Under this system, Venus would continue using its Resilient Oracle as the liquidation oracle, responsible for reporting real-time prices used in liquidation events. The Credit Extension Oracles (CEOs) would operate alongside it, taking Resilient Oracle prices as input and applying additional smoothing and filtering—producing more conservative, time-aware pricing specifically for loan issuance decisions.
Purpose-Built for Credit Issuance
CEOs are used only at the time of loan issuance to determine whether a position satisfies the protocol’s collateralization requirements. They do not affect liquidations, which continue to rely on the Resilient Oracle for timely and accurate solvency enforcement.
This separation ensures that:
- Liquidations remain fast and responsive, based on current market prices from the Resilient Oracle,
- While borrowing decisions are governed by smoothed, manipulation-resistant pricing through CEOs.
Governance-Controlled and Asset-Specific
Each Credit Extension Oracle is configured per asset, with Venus governance retaining full control over:
- Whether a given market uses a CEO or the Resilient Oracle for loan issuance,
- The smoothing profile applied to that oracle—such as TWAP duration and median window—which are determined at deployment time and fixed per oracle instance,
- And which specific CEO deployment is used for each asset.
While Venus governs the use, configuration, and application of CEO outputs, Adrastia manages the underlying oracle infrastructure. This includes setting the update threshold (e.g., minimum price change required to trigger an update) and the heartbeat (maximum delay between updates) for the price accumulator feeding into each CEO.
These parameters are used to strike a balance between gas efficiency and price precision, allowing the system to remain cost-effective without sacrificing reliability. Adrastia does not have any control over the price source, smoothing logic, or reported output—those are fully defined at deployment and governed by the Venus DAO.
This separation of concerns allows Venus to implement credit issuance policy transparently and securely, while delegating operational tuning to a trusted oracle provider.
Layered Protection for Borrowing
By isolating CEO usage to the borrowing path, Venus gains the benefits of a dual-oracle system:
- The Resilient Oracle provides accurate, real-time liquidation pricing,
- CEOs enforce conservative, volatility-resistant pricing for loan issuance.
Even when collateral factors are permissive, borrowers must satisfy CEO-based price checks that require proven, sustained value, not just momentary price spikes. This layered design enhances protocol solvency, reduces credit risk, and strengthens lender protections without introducing additional governance overhead.
Automated XVS Emissions (R&D)
Venus currently uses XVS emissions to incentivize borrowing and supplying activity across its markets. These emissions play a key role in guiding user behavior and supporting market growth. However, managing them manually can require frequent intervention and consume valuable governance bandwidth.
As part of this proposal, Adrastia and Anthias will begin research and development on an automated XVS emissions system—designed to reduce overhead, improve efficiency, and enhance the alignment of incentives with real-time protocol conditions.
Phase 1: Automated Reduction Schedules
XVS emissions have been gradually reduced over time. The Adrastia Prudentia framework can support this process by automating predefined emission tapering schedules. This helps streamline operations and ensures consistent application of governance-defined reduction plans—freeing up time for more strategic decision-making.
Phase 2: Feedback-Driven Emissions (Post-Integration R&D)
After the core risk tooling has been successfully integrated, Adrastia will explore a second phase focused on feedback-driven emissions. This system would adjust XVS incentives dynamically in response to market behavior—such as utilization, borrowing demand, or supply growth—with the goal of maximizing capital efficiency and protocol growth.
As a hypothetical example, a controller could be created to incentivize supply growth by targeting weekly growth of 5%. If growth is less than this, rewards can scale up gradually until either the target growth or the maximum incentive rate is hit. If growth exceeds the target, rewards can gradually scale down.
This effort will be approached as an open R&D initiative in collaboration with the Venus community, with ongoing transparency and opportunities for stakeholder input.
Performance Evaluation
To ensure accountability, the DAO can assess our effectiveness as risk contributors based on the following performance metrics:
- Timely risk recommendations: Core parameter and minimum reserve recommendations delivered at the cadence listed above.
- Long-tail risk coverage: incidents are reported within 24 hours.
- New asset listings: asset listing requests that pass a temp check should have risk parameters from our team within 48 hours.
- Utilization performance: Adrastia’s performance metrics as described in The Market Utilization Problem & Adrastia’s PID-Hybrid Interest Rate Controller.
Timeline
Upon the community passing the proposal, Anthias will immediately begin work on risk monitoring and parameter recommendations, as outlined in the “Partnership Scope” section.
In parallel, the Adrastia team will begin a gradual rollout of the Prudentia controllers and Credit Extension Oracles (CEOs)—starting with one or two smaller markets, such as Arbitrum or Base. This phased deployment allows time to validate controller behavior, fine-tune configurations, and ensure smooth integration before expanding to additional markets.
To support this rollout, Adrastia will reach out to the Venus team to coordinate on the integration of the full suite of risk tooling into Venus’s architecture. This includes:
- Connecting the Supply & Borrow Cap Controller, Collateral Factor Controller, XVS Emissions Controller, and CEO logic to Venus’s market configuration infrastructure.
- Assisting with the deployment and configuration of the Prudentia PID-Hybrid enabled interest rate model contracts.
As integration progresses, interest rates and caps will begin adjusting dynamically in response to real market usage, boosting utilization, capital efficiency, and protocol safety. Collateral factors, while configured manually, will benefit from step-wise, rate-limited tooling that enables timely and controlled adjustments.
Pending successful results from the initial deployment(s), Adrastia will proceed with additional chain rollouts at an accelerated pace. This modular and incremental approach—paired with gradual parameter tuning such as incremental increases in target utilization—will help ensure a smooth and stable protocol-wide transition.
Integration
The integration of Adrastia’s systems into the Venus Protocol will require coordination with the Venus development team. The recommended integration steps are as follows:
- Prudentia PID-Hybrid Interest Rate Controller: Deploy the Adrastia interest rate model contracts and update each market’s vToken to use them. This system will serve as Adrastia’s first integration.
- Prudentia Supply & Borrow Cap Controller: Modify the Comptroller to grant push access to the Cap Controller, and configure the controller to update caps directly on the protocol.
- Prudentia Collateral Factor Controller: Modify the Comptroller to grant push access to the CF Controller, and configure the controller to update CFs directly on the protocol.
- Prudentia XVS Emissions Controller: Modify the Comptroller to grant push access to the Emissions Controller, and configure the controller to update emissions directly on the protocol.
- Credit Extension Oracles (CEOs): Requires a more extensive Comptroller upgrade to support multiple oracle sources—specifically, one for liquidation pricing (Resilient Oracle) and two for loan issuance (collateral valuation and debt valuation). Adrastia will assist with the design and implementation of this integration.
These components are modular and can be integrated incrementally, starting with the least invasive upgrades.
Budget
Anthias and Adrastia request a total of $40,000/month to serve as the risk partner team for Venus. This fee includes all operational costs, including gas expenses for all supported non-Ethereum deployments, and excluding BNB Chain.
If Venus expands to additional chains or markets, the monthly fee can be adjusted accordingly. This payment stream may be canceled at any time by DAO vote should the community choose to discontinue the partnership.
Closing
Thank you to the Venus community—and especially the many individuals who engaged during the drafting of this proposal. We’re excited for the opportunity to support Venus and look forward to working closely with the DAO.
If you have questions or would like to discuss before commenting, feel free to reach out to:
- Anthias:
@OxBrozeon Telegram or [email protected] - Adrastia:
@tyleretheron Telegram or [email protected]