Risk, Limits, and Concentration Framework
This page describes how attn thinks about risk and limits on revenue-backed positions. It is an operator-led framework in early versions of the protocol.
It covers:
- what risks are relevant,
- how facility sizes and limits are set,
- how concentration and portfolio caps are managed,
- and how losses are handled.
1. Risk types
attn focuses on a small set of core risks:
- Revenue risk – volatility or decline of the underlying revenues.
- Counterparty / execution risk – teams disappearing, misusing funds, or breaching terms.
- Concentration risk – too much exposure to one project, sector, or launchpad.
- Tenor / liquidity risk – advances or lines that are too long relative to how quickly losses can be realised.
- Stablecoin / infra risk – issues with the stablecoins or infra used by the vault (including Exponent Finance’s SY contracts for PT/YT and Squads Safe for revenue account custody).
Other risks (program, chain-level, legal) are acknowledged but treated separately.
2. Facility-level limits
For each project / facility, attn sets:
- a maximum limit (notional) per project,
- a maximum advance size per position,
- maximum revenue share and maximum tenor per position.
Initial limits are constrained by:
- observed revenue history (level and volatility),
- quality and redundancy of the revenue account wiring,
- team and launchpad track record,
- and overall portfolio utilisation.
These limits are operator-set in early versions and adjusted based on performance and stress tests.
3. Portfolio-level limits
At the portfolio level, attn maintains caps on:
- name concentration – max % of NAV in any single project,
- launchpad / ecosystem concentration – max % per launchpad or vertical,
- tenor buckets – how much of the book can sit in >3m, >6m, etc.,
- seniority – mix of senior vs more subordinated positions.
New positions are only approved if they fit within these caps. Otherwise they are resized, re-priced, or declined.
4. Losses, recoveries, and any buffers
Losses primarily hit YT holders (i.e. attnUSD LPs), via lower NAV:
- if a position falls short of
R_target, the shortfall is recognised as a loss, - recoveries (late revenue, collateral realisation) are credited back to NAV when and if they materialise.
In later phases, the protocol may add explicit buffers / insurance funds funded from fees.
Those are out of scope for the initial version and will be documented separately if/when live.
5. Who sets and updates parameters
In early versions, risk and limits are set by the core operator / risk team:
- parameter changes are reflected in code and in public docs,
- material changes (e.g. new max tenors, facility size bands) are announced.
If and when the protocol moves to a more decentralised governance model, this page will be updated to reflect that process. Until then, assume a conservative, operator-led risk framework focused on short maturities and diversified exposure.