How Do DAOs Use Smart Contracts to Manage Risk for a Portfolio of Crypto Derivatives?

DAOs use smart contracts to automate risk management by setting predefined rules that trigger actions without manual intervention. For example, a smart contract can be programmed to automatically close a futures position if it falls below a certain price, acting as a stop-loss.

They can also automate diversification by allocating capital across various derivatives based on risk parameters. For options, smart contracts can automatically exercise contracts when they become profitable or hedge positions by buying puts if the market turns bearish, all based on real-time data from oracles.