Over the weekend, crypto markets saw a sharp drawdown that put leverage across the ecosystem under pressure. These moments tend to follow a familiar chain reaction: volatility spikes, margin tightens, and liquidations accelerate. Sentora curated vaults and strategies experienced no liquidations or bad debt, here’s why.
Risk management at Sentora is a key element of our platform. It is built into how we design, monitor, and operate every strategy and vault. Our approach consists of a structured framework that quantifies risk, monitors it continuously, and enforces predefined controls automatically.
What happened during the drawdown
Cryptocurrency market cap dropped sharply since Thursday the 29th of January, with over 14% of the combined market cap evaporating over the weekend. This caused over 127 million in DeFi liquidations in the past 4 days across major markets. During the initial market move, our standard automated protocols performed quickly and as designed.
Sequence of actions
Automated response (first line of defense): Rebalancing and risk controls triggered during the first leg of the drawdown, adjusting exposure as risk thresholds were hit.
Risk Desk reinforcement: After automation stabilized the initial move, our Risk Desk recommended additional adjustments to further strengthen our automated and programmatic buffers against continued volatility.
This automation-driven model underpins the strength of our products. Our automated systems enable immediate responses to predefined, quantifiable thresholds, and by incorporating Risk Desk recommendations to expand automation parameters, we introduce context-driven reinforcement when market conditions remain unstable.
Our risk approach: awareness to discipline
DeFi does not fail for lack of innovation. It fails when technical and economic risks go unmanaged. Sentora applies a repeatable framework across seven core risk areas: technical, concentration, liquidity, interest rate, duration, leverage and looping, and correlation. These risks are not just assessed. They are continuously measured and monitored through Risk Radar, our alerting and oversight system that tracks key metrics and escalates breaches through predefined governance channels. When markets move fast, those controls matter most. This approach has ensured efficient and safe operations at scale for over 5 years.
A concrete example: automated rebalancing for Ether.fi liquid
Sentora has long collaborated with Ether.fi to support the Ether.fi Liquid vault, which currently has over $500 million in TVL. At the time of the crash, a large portion of those assets were deployed in lending positions across major lending venues.
As triggers fired across our system, tens of millions worth of assets were automatically rebalanced. The goal was not to predict the market. The goal was to systematically mitigate risks and maintain healthy collateral buffers through volatility.
This is a direct application of our broader operating model:
Automated rebalancing based on predefined parameters (for example, health factor thresholds and liquidity constraints)
Vault-level monitoring across liquidity, concentration, and peg stability
Escalation when conditions breach thresholds based on structured reviews and advanced data
During this downturn, the system has avoided liquidations and bad debt across Sentora’s automated vaults and strategies.
Current status
As of this update:
All supervised loan positions are at conservative health factors, providing a meaningful buffer against further downside and reducing liquidation risk.
All assets are safe.
There have been no liquidations and no bad debt.
Why this matters
In fast-moving markets, the difference between stability and forced liquidation is often measured in seconds. Sentora is built to operate through those seconds with discipline:
Our guiding principle remains simple: return of capital before return on capital.
That is what Sentora Smart Yield is designed for. Systematic monitoring, automated position management, and measurable risk controls when markets get stressed.