# Default risk assessment framework and fees parameters for Lido V3 (stVaults)

**URL:** <https://research.lido.fi/t/default-risk-assessment-framework-and-fees-parameters-for-lido-v3-stvaults/10504>\
**Category:** Lido V3\
**Created:** [August 8, 2025, 1:44pm UTC](https://research.lido.fi/t/default-risk-assessment-framework-and-fees-parameters-for-lido-v3-stvaults/10504 "2025-08-08T13:44:36Z")\
**Posts on this page:** 1\
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**Author:** ![Mol\_Eliza](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/mol_eliza/32/3617_2.png) [@Mol\_Eliza](https://research.lido.fi/u/Mol_Eliza)\
**Post date:** [November 13, 2025, 2:32pm UTC](https://research.lido.fi/t/default-risk-assessment-framework-and-fees-parameters-for-lido-v3-stvaults/10504/3 "2025-11-13T14:32:18Z")

</div>

**Force Rebalance Threshold (FRT)**

As mentioned in the initial [Risk Assessment Framework for stVaults](https://research.lido.fi/t/risk-assessment-framework-for-stvaults/9978/1) post, there should be

> a tech, ensuring collateral / minted stETH balance for defined risk scenarios - **rebalancing mechanism**

as one of the invariants, supporting the first principle:

> Vault users don’t negatively affect stETH users

Details on technical implementation could be found in [Lido V3 — Design & Implementation Proposal](https://research.lido.fi/t/lido-v3-design-implementation-proposal/10665/1), with two risk thresholds:

> - Reserve Ratio (RR): Minimum reserve percentage (e.g., 10%) - blocks new mints when breached
> 
> - Force Rebalance Threshold (FRT): Critical reserve level (e.g., 5%) - enables forced rebalancing

With the Reserve Ratio logic and values described above, it is suggested to determine **Force Rebalance Threshold (FRT)** as an offset to Reserve Ratio, sufficient to cover:

- Randomness in the level of rewards (mainly derived from block proposals)
- Possible operational problems within the stVault staking setup

Given that, it is suggested to operate on the most **negative conditions,** assuming

1. Continuous Lido Core APR of **4%**
2. **Zero proposals** for the stVault validators
3. Moderate to high share of vault validators being **offline**
4. Lowest possible **RR = 2%**

 ![image](https://europe1.discourse-cdn.com/flex013/uploads/lido/original/2X/c/c44005c1d83af6ff8f5540a32a352376684e70a7.png)Under this assumption, even considering 100% stVaults validators being offline, the time to trigger rebalancing would be:

- 65 days at 1% offset

- 32 days at 0.5% offset

- **16 days at 0.25% offset**

- 6.5 days at 0.1% offset

Given that, the suggested values for **FRT are RR - 0.25% (e.g, 5% Reserve Ratio and 4.75% Force Rebalancing threshold)**, providing:

1. Sufficient collateral volume for the risk scenarios defining Reserve Ratio values

2. Reasonable _buffer_ for operational any inefficiency (or effect of rewards randomness), ensuring more than two weeks until the rebalance mechanism thresholds activation

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_[View the full topic](https://research.lido.fi/t/default-risk-assessment-framework-and-fees-parameters-for-lido-v3-stvaults/10504)._