Risk Monitoring

Zharta closely monitors external risks (market-related) and internal risks (Zharta-related) through a set of indicators:

Key External Indicators

1. Community activity (unique holders, wallet activity, others)

2. Liquidity in AMM/Pools for trading and lending

3. Lending volume in NFT lending markets

4. Sales volume in NFT marketplaces

5. Volatility of NFT collection returns

6. Market capitalization of NFT collections

7. Social media activity (# followers on Twitter, Discord, Telegram, others)

Key Internal indicators

1. Minimum Recovery Rate of Credit Portfolio

2. Total Portfolio LTV

3. Portfolio Default Rate

Risk Measures

Some situations may require temporary risk mitigation procedures or require the removal of a particular NFT collection. The conditions that lead to the corresponded actions are tracked daily by our internal risk team. Risk mitigation procedures may include:

Temporary risk mitigation	Actions
Extreme price volatility in the entire market or specific to an NFT collection Massive hack on an NFT collection Deterioration of key indicators, especially those related to market capitalization, volume, and liquidity	Reduction in max LTV across all maturity offers Reduction in allowed debt limit per Supported Collection

Removal conditions	Actions
Negative brand exposure for being associated with a particular NFT collection Significant and consistent deterioration of key indicators, especially those related to market capitalization, volume, and liquidity	Debt limits are set to zero so that no new origination is allowed An alert is sent to users on the app and the NFT collection is quickly removed from Zharta's front-end Effective communication with the community via social media