Assets Standardization

Modular Risk-Weighted Virtual Collateral Engine (MRVCE)

To address the challenges of risk management and capital efficiency in restaking ecosystems, we propose a Modular Risk-Weighted Virtual Collateral Engine (MRVCE) — a flexible, scalable, and transparent framework designed to enable decentralized underwriting without requiring on-chain token conversions.

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🎯 Core Requirements

The proposed solution must:

• Eliminate on-chain token conversions, reducing gas overhead.

• Enable seamless interoperability across various restaked assets.

• Account for individual asset risks, such as LBTC’s compatibility vs. stETH’s liquidity.

• Provide transparency and auditability for both users and auditors.

• Scale effortlessly as new restaked assets are introduced into the system.

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⚙️ Mechanism Design

A. Asset Classification & Risk Weighting

A dedicated module classifies all restaked assets based on dynamic risk parameters:

• Price Volatility (on-chain and off-chain deviation)

• Liquidity Depth (across CEX/DEX markets)

• Correlation to Native Pairs (ETH or BTC)

• Slashing and Unbonding Risks

• Oracle Latency and Trust Assumptions

Example Dynamic Risk Weight Table:

Token	Risk Weight	Category
stETH	1.00	LST (ETH-native, high liquidity)
rETH	0.95	LST (medium liquidity)
LBTC	0.30	BTC-native, low compatibility
EIGEN	0.10	Governance, illiquid

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B. Virtual Collateral Pool (VCP)

All restaked assets from operators are virtually converted into USD value via oracle feeds (Chainlink or TWAP-based) and assigned a Risk-Adjusted Value (RAV) using:

iniCopyEditRAV = Nominal Value × Risk Weight

This RAV acts as the underwriting capacity benchmark for operators.

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C. Market Pair Converter

When an operator underwrites in a specific market (e.g., WETH/USDC):

• The engine aggregates total RAV from the operator.

• Virtually converts it to ETH or BTC equivalent using real-time oracle rates.

• Records the contribution breakdown per token and associated risk weights.

👉 No token swaps — purely virtual accounting.

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💡 Advantages of This Approach

Dimension	Advantage
Fairness	Operators with higher quality assets receive higher capacity allocations.
Risk-Based Protection	Safeguards against volatile or illiquid collaterals.
Scalability	New restaked tokens can be integrated without restructuring the core system.
On-Chain Efficiency	Zero token swaps required, minimizing gas costs.
Flexibility & Compliance	Supports AVSs/operators with diverse restaking strategies.

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📊 Case Study Example

Operator A Holdings:

• 2 stETH ($4,000)

• 3 rETH ($6,000)

• 1 LBTC ($60,000)

Total Nominal Value: $70,000

Case Study before and after adjust

Risk-Adjusted Values (RAV):

• stETH: $4,000 × 1.00 = $4,000

• rETH: $6,000 × 0.95 = $5,700

• LBTC: $60,000 × 0.30 = $18,000

Total RAV: $27,700

Underwriting Capacity in ETH (if ETH = $2,000):

$27,700 ÷ $2,000 = 13.85 ETH

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🔍 Closing Thought

This Modular Risk-Weighted Virtual Collateral Engine unlocks a highly composable, fair, and efficient underwriting infrastructure for the future of restaking-based ecosystems — a system where capital efficiency, risk transparency, and operational scalability coexist by design.