Risk Levels

Yield Optimization Strategy and Risk Management

Level 1

Our main approach to yield optimization , grounded in a philosophy of safety and risk mitigation. The strategy is centered around identifying and capitalizing on the most secure yield opportunities available in the DeFi space. This approach involves a careful selection of investment pools, prioritizing those with a proven track record of stability and reliability.

Key aspects of our yield optimization strategy include:

• Choosing Stablecoins and Established Pools: We focus on stablecoins and established pools within the Ethereum network, which are known for their stability and lower risk profiles compared to more speculative assets. This selection criteria ensure that our users' investments are as safe as possible while still generating attractive yields.

• Risk Assessment Methodologies: Our AI algorithms integrate advanced risk assessment methodologies. These methodologies evaluate various factors, including the historical performance of pools, their volatility, and the overall health of the underlying blockchain network. By doing so, we can accurately gauge the risk level of each investment opportunity and keep the risk level to almost non-existent.

Our commitment to risk management does not compromise the ability to generate competitive yields. Instead, it forms the foundation upon which our yield optimization strategies are built, ensuring that our users can invest with confidence and peace of mind.

Level 2

Building upon our foundational Risk Level 1 strategy, which emphasizes safety and stability, Fortuna Finance also offers a Risk Level 2 strategy designed for users seeking higher yield potentials. This intermediate risk level caters to those willing to engage with more dynamic and diverse investment opportunities in the DeFi space.

• Diversified Pools with Higher Yields: Risk Level 2 focuses on pools that typically offer APYs above 15%. These pools often involve staking multiple assets and provide returns not only in the staked assets but also in additional reward tokens. While these pools offer higher yields, they also carry a moderately higher risk profile due to the involvement of multiple assets and the potential variability in reward token values. Our strategy here is to balance this increased yield potential with a measured approach to risk.

• Application of AI Models for Optimized Decisions: As explained in the “AI Models and Algorithms: Practical Application”, the k-Nearest Neighbours (kNN) and Naive Bayes Classifier play a crucial role. These models analyze various factors, including asset volatility, correlation between the assets in the pool, and the historical performance and stability of the reward tokens. By leveraging these AI models, Fortuna Finance can intelligently allocate assets within these higher-yield pools while still maintaining a focus on risk mitigation , by allocating the user's assets to the pool that historically showed the lowest level of volatility and the lowest probability of abrupt price declining.

Risk Level 2 is an integral part of Fortuna Finance's broader strategy to cater to diverse investor profiles. It allows users to tap into more lucrative yield opportunities while still benefiting from our AI-driven analysis and risk assessment capabilities. This tier is ideal for users who are comfortable with a moderate level of risk and are looking to diversify their DeFi investment portfolio beyond the most stable and established pools.