# 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.

***

#### 🎯 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.

***

### ⚙️ 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             |

***

#### 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:

```bash
iniCopyEditRAV = Nominal Value × Risk Weight
```

This RAV acts as the underwriting capacity benchmark for operators.

***

#### 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.

***

### 💡 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.                   |

***

### 📊 Case Study Example

**Operator A Holdings:**

* 2 stETH ($4,000)
* 3 rETH ($6,000)
* 1 LBTC ($60,000)

**Total Nominal Value:** $70,000

<figure><img src="https://752972363-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FLx7JfkHdxK0nTFd8ffXa%2Fuploads%2Fo1pYJzsgjc0k7mOkog03%2FScreenshot%20(1205).png?alt=media&#x26;token=3019171f-19d5-4f17-a925-07bd2d7722c7" alt=""><figcaption><p>Case Study before and after adjust</p></figcaption></figure>

**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

<figure><img src="https://752972363-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FLx7JfkHdxK0nTFd8ffXa%2Fuploads%2FiYll1Vk4XmF0jyPySkl5%2FScreenshot%20(1206).png?alt=media&#x26;token=20b820ca-2abb-4ad8-9f6a-7dab3937dba7" alt=""><figcaption></figcaption></figure>

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

```
$27,700 ÷ $2,000 = 13.85 ETH
```

***

### 🔍 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.
