Riskify Architecture

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System Overview
Core Architecture Layers
Token Ecosystem
Risk Management Framework
Integration Flow
Technical Implementation
Component Interactions
Related Documentation

System Overview
Core Architecture Layers
Token Ecosystem
Risk Management Framework
Integration Flow
Technical Implementation
Component Interactions
Related Documentation

System Overview

Riskify is an integrated infrastructure platform designed to modernize and democratize access to reinsurance capacity by transforming how catastrophe risk is underwritten, pooled, syndicated, and traded. The system utilizes a modular architecture of smart contracts, on-chain oracles, and standardized token primitives to allow property & casualty (P&C) insurers, reinsurers, and external capital providers to interact in real-time through transparent, collateral-backed, programmatic agreements.

Core Architecture Layers

Layer 1: Ethereum 2.0

Base blockchain infrastructure
Smart contract execution environment
Transaction processing and consensus

Layer 2: Riskify Security Protocol

Custom security layer built on Ethereum
SHA256 cryptography for transaction privacy
Authentication and authorization systems

Layer 3: Riskify Marketplace

Core trading infrastructure
Order matching and execution
Liquidity management

Layer 4: Core Engine Components

Risk Pricing Models
Zero Knowledge Proofs (ZKPs)
Market Making Engine
Automated risk assessment

Layer 5: Oracle Integration

NOAA integration for weather data
USGS for seismic activity
NASA FIRMS for wildfire tracking
PCS for claims validation

Layer 6: DApp Interface

User interaction layer
Portfolio management
Risk monitoring
Analytics dashboard

Layer 7: DEX Integration

Token trading infrastructure
Liquidity pools
Price discovery mechanisms

Token Ecosystem

Token Types and Standards

Share Tokens (TYPE 0)
- Direct capital allocation to specific risk pools
- Premium income and yield rights
- ERC-20 compliant
Bundle Tokens (TYPE 1)
- Composite instruments across multiple tiers
- Standardized risk profiles
- ERC-1155 compliant
Derivative Tokens (TYPE 2)
- Synthetic positions without direct capital allocation
- Hedging and leverage capabilities
- ERC-20 compliant
Yield Tokens (TYPE 3)
- Accumulated premium and investment returns
- Claimable yields
- ERC-20 compliant

Token Encoding Framework

graph LR
    subgraph Token ID Encoding
        A[Token ID] --> B[Pool ID]
        A --> C[Tier Level]
        A --> D[Token Type]
        
        B --> B1[16 bits]
        C --> C1[2 bits]
        D --> D1[2 bits]
    end

Risk Management Framework

Risk Assessment Components

Dynamic Risk Scoring
- Real-time risk metric updates
- Multi-factor risk modeling
- Geographic correlation analysis
Risk Pool Architecture
- Senior Tier (First Loss)
- Mezzanine Tier (Middle Layer)
- Junior Tier (Last Loss)
Risk Transfer Mechanisms
- Parametric triggers
- Automated payout processing
- Collateral management

Risk Pool Structure

graph TD
    subgraph Risk Pool Structure
        A[Risk Pool] --> B[Senior Tier]
        A --> C[Mezzanine Tier]
        A --> D[Junior Tier]
        
        B --> B1[First Loss]
        B --> B2[Highest Risk]
        B --> B3[Highest Yield]
        
        C --> C1[Middle Layer]
        C --> C2[Balanced Risk]
        C --> C3[Moderate Yield]
        
        D --> D1[Last Loss]
        D --> D2[Lowest Risk]
        D --> D3[Stable Yield]
    end

Integration Flow

Asset Tokenization
- Building tokenization
- Risk parameter encoding
- Metadata management
Risk Pool Formation
- Pool configuration
- Capital allocation
- Risk distribution
Market Operations
- Order matching
- Price discovery
- Liquidity provision
Event Processing
- Trigger validation
- Payout execution
- Token burning

Technical Implementation

Smart Contract Architecture

struct TokenData {
    bytes32 poolId;
    uint8 tierLevel;
    uint8 tokenType;
    uint256 riskScore;
    uint256 timestamp;
}

struct PoolConfig {
    uint256 poolId;
    uint256 maxExposure;
    uint256 minCollateral;
    uint256 targetYield;
    uint256 minDiversification;
    uint256 maxConcentration;
    uint256 minLiquidity;
    uint256 maxLeverage;
    uint256 minStake;
    uint256 maxStake;
    uint256 minLockPeriod;
    uint256 maxLockPeriod;
    Tier[] tiers;
    bytes32[] allowedRegions;
    bytes32[] allowedPerils;
    bool isActive;
}

Key Features

Token Standardization
- ERC-20 for Share Tokens
- ERC-721 for Building Tokens
- ERC-1155 for Risk Pool Tokens
Risk Management
- Multi-tiered risk allocation
- Automated risk assessment
- Dynamic premium calculation
Liquidity Management
- Flexible pool types
- Cross-chain compatibility
- Automated rebalancing
Compliance & Security
- Regulatory reporting
- Risk transfer validation
- Solvency verification

Best Practices

Token Management
- Use appropriate token standards
- Implement proper access controls
- Maintain clear token metadata
Risk Assessment
- Regular risk metric updates
- Comprehensive validation checks
- Automated risk scoring
Pool Operations
- Clear tier definitions
- Transparent fee structures
- Automated rebalancing triggers
Security Considerations
- Regular audits
- Access control implementation
- Emergency pause functionality

Component Interactions

System Integration Flow

graph TD
    subgraph System Integration
        A[Asset Tokenization] --> B[Risk Assessment]
        B --> C[Pool Formation]
        C --> D[Market Operations]
        D --> E[Event Processing]
        
        A --> F[Building Tokens]
        B --> G[Risk Scores]
        C --> H[Risk Pools]
        D --> I[Trading]
        E --> J[Payouts]
    end

Layer Interactions

graph TD
    subgraph Layer Communication
        L1[Layer 1: Ethereum] --> L2[Layer 2: Security]
        L2 --> L3[Layer 3: Marketplace]
        L3 --> L4[Layer 4: Core Engine]
        L4 --> L5[Layer 5: Oracles]
        L5 --> L6[Layer 6: DApp]
        L6 --> L7[Layer 7: DEX]
        
        L4 -.-> L2
        L5 -.-> L3
        L6 -.-> L4
        L7 -.-> L5
    end

Token Flow

sequenceDiagram
    participant I as Investor
    participant P as Risk Pool
    participant T as Token System
    participant R as Risk Engine
    
    I->>P: Deposit Capital
    P->>T: Mint Share Tokens
    T->>I: Issue Tokens
    P->>R: Update Risk Metrics
    R->>P: Risk Assessment
    P->>T: Generate Yield Tokens
    T->>I: Distribute Yields