> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dynamo.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Rating

> How Dynamo assigns Low, Medium, and High risk tiers to markets and vaults based on on-chain data.

Dynamo assigns a risk tier to every market and vault throughout the [Morpho protocol](https://dynamo.finance/) so you can quickly assess risk before supplying capital. Tiers are derived from objective, on-chain parameters, not subjective judgment.

## Market Risk Rating

Each market is evaluated on three variables:

| Variable        | Description                                                                                    |
| :-------------- | :--------------------------------------------------------------------------------------------- |
| **Market LLTV** | Liquidation Loan-to-Value. Higher LLTV = less buffer before liquidation = more risk.           |
| **Market TVL**  | Total Value Locked in the market. Larger markets have absorbed more real usage and volatility. |
| **List date**   | How long the market has been live. Newer markets are treated as less battle-tested.            |

### Tiers

<AccordionGroup>
  <Accordion title="🟢 Low Risk" icon="circle-check">
    All three conditions must be met:

    * LLTV **≥ 86%**
    * Market TVL **> \$10M**
    * Market has been live for **at least 3 months**
  </Accordion>

  <Accordion title="🟡 Medium Risk" icon="circle-exclamation">
    All three conditions must be met, and the market must **not** already qualify as Low risk:

    * LLTV **≥ 77%**
    * Market TVL **> \$1M**
    * Market has been live for **at least 1 month**
  </Accordion>

  <Accordion title="🔴 High Risk" icon="triangle-exclamation">
    Any market that does not meet the criteria for Low or Medium risk.

    Typical causes: aggressive LLTV (below 77%), small TVL, or a very recently listed market.
  </Accordion>
</AccordionGroup>

***

## Vault Risk Rating

Vaults are evaluated on three variables:

| Variable            | Description                                                                                                                         |
| :------------------ | :---------------------------------------------------------------------------------------------------------------------------------- |
| **Total Supplied**  | Total USD value deposited into the vault. Larger vaults signal stronger user confidence and liquidity depth.                        |
| **Market exposure** | The share of the vault's allocation directed to Low-risk markets. Higher concentration in Low-risk markets = safer overall profile. |
| **List date**       | How long the vault has been live. Newer vaults are treated as less battle-tested.                                                   |

### Tiers

<AccordionGroup>
  <Accordion title="🟢 Low Risk" icon="circle-check">
    All conditions must be met:

    * Total Supplied **> \$10M**
    * At least **70%** of market exposure is in Low-risk markets
  </Accordion>

  <Accordion title="🟡 Medium Risk" icon="circle-exclamation">
    All conditions must be met, and the vault must **not** already qualify as Low risk:

    * Total Supplied **> \$1M**
    * At least **30%** of market exposure is in Low-risk markets
  </Accordion>

  <Accordion title="🔴 High Risk" icon="triangle-exclamation">
    Any vault that does not meet the criteria for Low or Medium risk.

    Typical causes: small total supplied, heavy allocation to Medium- or High-risk markets, or a recently launched vault.
  </Accordion>
</AccordionGroup>

***

<Note>
  Risk tiers are structural heuristics, not predictions. A Low-risk market can still suffer losses from oracle failure, smart contract bugs, or extreme collateral price moves. Always read the underlying parameters before depositing.
</Note>