How DeFi Protocols Reduce Treasury Risk by 73% with Real-Time Forex Integration

// Real-time treasury conversion with risk monitoring
async function convertTreasuryFunds(
  amount: number,
  fromCurrency: string,
  toCurrency: string,
  riskThreshold: number = 0.02
): Promise<ConversionResult> {
  const startTime = Date.now();

  try {
    // Real-time conversion with sub-50ms response
    const conversion = await currencyApi.convert({
      from: fromCurrency,
      to: toCurrency,
      amount: amount,
      headers: {
        'x-api-key': process.env.TREASURY_API_KEY,
        'x-request-id': generateRequestId()
      }
    });

    const responseTime = Date.now() - startTime;

    // Risk validation before execution
    if (conversion.spread > riskThreshold) {
      await triggerRiskAlert({
        type: 'HIGH_SPREAD',
        spread: conversion.spread,
        threshold: riskThreshold,
        timestamp: new Date().toISOString()
      });

      throw new Error('Conversion spread exceeds risk threshold');
    }

    // Execute treasury rebalancing
    await updateTreasuryHoldings({
      from: fromCurrency,
      to: toCurrency,
      amount: amount,
      rate: conversion.exchangeRate,
      convertedAmount: conversion.convertedAmount,
      executionTime: responseTime
    });

    return {
      success: true,
      exchangeRate: conversion.exchangeRate,
      convertedAmount: conversion.convertedAmount,
      responseTime: responseTime,
      riskScore: calculateRiskScore(conversion)
    };

  } catch (error) {
    await logTreasuryError({
      error: error.message,
      conversionDetails: { amount, fromCurrency, toCurrency },
      timestamp: new Date().toISOString()
    });

    throw error;
  }
}

// Continuous treasury risk monitoring
class TreasuryRiskMonitor {
  private riskThresholds = {
    maxCurrencyExposure: 0.30, // 30% max per currency
    minLiquidityRatio: 0.15,   // 15% minimum liquidity
    maxVolatilityThreshold: 0.05, // 5% daily volatility limit
    conversionDelayLimit: 300   // 5 minutes max conversion time
  };

  async monitorTreasuryHealth(): Promise<RiskReport> {
    const treasuryData = await this.getCurrentTreasuryState();
    const riskFactors: RiskFactor[] = [];

    // Check currency concentration risk
    for (const [currency, allocation] of Object.entries(treasuryData.allocations)) {
      if (allocation.percentage > this.riskThresholds.maxCurrencyExposure) {
        riskFactors.push({
          type: 'CURRENCY_CONCENTRATION',
          severity: 'HIGH',
          currency,
          percentage: allocation.percentage,
          recommendation: 'Diversify holdings across more currencies'
        });
      }
    }

    // Monitor real-time volatility
    const volatilityData = await this.getRealTimeVolatility();
    if (volatilityData.dailyChange > this.riskThresholds.maxVolatilityThreshold) {
      riskFactors.push({
        type: 'HIGH_VOLATILITY',
        severity: 'MEDIUM',
        change: volatilityData.dailyChange,
        recommendation: 'Consider automated rebalancing to stable currencies'
      });
    }

    // Check API response times
    const apiPerformance = await this.checkApiPerformance();
    if (apiPerformance.averageResponseTime > this.riskThresholds.conversionDelayLimit) {
      riskFactors.push({
        type: 'API_PERFORMANCE',
        severity: 'HIGH',
        responseTime: apiPerformance.averageResponseTime,
        recommendation: 'Switch to lower-latency forex provider'
      });
    }

    return {
      overallRiskScore: this.calculateOverallRisk(riskFactors),
      riskFactors,
      recommendations: this.generateRecommendations(riskFactors),
      lastUpdated: new Date().toISOString()
    };
  }

  async executeAutomatedRebalancing(riskReport: RiskReport): Promise<void> {
    const highRiskFactors = riskReport.riskFactors.filter(f => f.severity === 'HIGH');

    for (const risk of highRiskFactors) {
      switch (risk.type) {
        case 'CURRENCY_CONCENTRATION':
          await this.diversifyCurrency(risk.currency, risk.percentage);
          break;
        case 'HIGH_VOLATILITY':
          await this.moveToFiatStablecoins();
          break;
        case 'API_PERFORMANCE':
          await this.switchToBackupProvider();
          break;
      }
    }
  }
}

// Multi-currency treasury optimization
interface TreasuryOptimizationConfig {
  targetCurrencies: string[];
  maxSlippage: number;
  rebalanceFrequency: number;
  riskTolerance: 'LOW' | 'MEDIUM' | 'HIGH';
}

class TreasuryOptimizer {
  async optimizeAllocation(
    totalValue: number,
    config: TreasuryOptimizationConfig
  ): Promise<OptimizedAllocation> {
    const currentRates = await this.getRealTimeRates();
    const volatilityData = await this.getVolatilityForecasts();

    // Calculate optimal allocation based on risk metrics
    const allocations = config.targetCurrencies.map(currency => {
      const rate = currentRates[currency];
      const volatility = volatilityData[currency];
      const riskAdjustedReturn = this.calculateRiskAdjustedReturn(rate, volatility);

      return {
        currency,
        percentage: this.calculateOptimalPercentage(
          riskAdjustedReturn,
          volatility,
          config.riskTolerance
        ),
        estimatedValue: totalValue * this.calculateOptimalPercentage(
          riskAdjustedReturn,
          volatility,
          config.riskTolerance
        ),
        confidence: this.calculateConfidence(volatility)
      };
    });

    // Sort by confidence and risk-adjusted returns
    allocations.sort((a, b) => b.confidence - a.confidence);

    return {
      allocations,
      totalValue,
      expectedReturn: this.calculateExpectedReturn(allocations),
      riskScore: this.calculatePortfolioRisk(allocations),
      rebalanceRecommendations: this.generateRebalanceActions(allocations)
    };
  }

  async executeRebalancing(
    currentAllocation: Allocation[],
    targetAllocation: Allocation[]
  ): Promise<RebalancingResult> {
    const rebalancingActions: RebalancingAction[] = [];

    for (const target of targetAllocation) {
      const current = currentAllocation.find(a => a.currency === target.currency);
      const difference = target.percentage - (current?.percentage || 0);

      if (Math.abs(difference) > 0.01) { // 1% minimum threshold
        const action = difference > 0 ? 'BUY' : 'SELL';
        const amount = Math.abs(difference) * target.estimatedValue;

        try {
          const conversion = await currencyApi.convert({
            from: 'USD', // Base currency for calculations
            to: target.currency,
            amount: amount,
            headers: { 'x-api-key': process.env.TREASURY_API_KEY }
          });

          rebalancingActions.push({
            action,
            currency: target.currency,
            amount,
            exchangeRate: conversion.exchangeRate,
            executionTime: conversion.responseTime,
            status: 'SUCCESS'
          });

        } catch (error) {
          rebalancingActions.push({
            action,
            currency: target.currency,
            amount,
            error: error.message,
            status: 'FAILED'
          });
        }
      }
    }

    return {
      totalActions: rebalancingActions.length,
      successfulActions: rebalancingActions.filter(a => a.status === 'SUCCESS').length,
      failedActions: rebalancingActions.filter(a => a.status === 'FAILED').length,
      totalValueRebalanced: rebalancingActions
        .filter(a => a.status === 'SUCCESS')
        .reduce((sum, a) => sum + a.amount, 0),
      averageExecutionTime: this.calculateAverageExecutionTime(rebalancingActions)
    };
  }
}

// Initialize currency exchange API for treasury management
import { CurrencyExchangeAPI } from '@currency-exchange/sdk';

const treasuryApi = new CurrencyExchangeAPI({
  baseURL: 'https://api.currency-exchange.app',
  apiKey: process.env.TREASURY_API_KEY,
  timeout: 5000, // 5 second timeout for treasury operations
  retryAttempts: 3,
  retryDelay: 1000
});

// Configure risk monitoring
const riskConfig = {
  maxSlippage: 0.01, // 1% maximum slippage
  minLiquidity: 100000, // $100K minimum liquidity
  supportedCurrencies: [
    'USD', 'EUR', 'GBP', 'JPY', 'CHF', 'CAD', 'AUD',
    'USDC', 'USDT', 'DAI', 'BUSD', 'TUSD'
  ],
  riskThresholds: {
    volatility: 0.05, // 5% daily volatility limit
    concentration: 0.30, // 30% max concentration per currency
    correlation: 0.70 // 70% max correlation between currencies
  }
};

// Real-time treasury monitoring dashboard
import React, { useState, useEffect } from 'react';
import { useConvertCurrencyApi } from '../hooks/use-convert-currency-api';

function TreasuryDashboard() {
  const [treasuryData, setTreasuryData] = useState(null);
  const [riskMetrics, setRiskMetrics] = useState(null);
  const [converting, setConverting] = useState(false);

  const [{ isLoading, data: conversionData }, convertCurrency] = useConvertCurrencyApi();

  // Real-time treasury updates
  useEffect(() => {
    const interval = setInterval(async () => {
      const data = await fetchTreasuryData();
      const risks = await assessTreasuryRisk(data);

      setTreasuryData(data);
      setRiskMetrics(risks);
    }, 5000); // Update every 5 seconds

    return () => clearInterval(interval);
  }, []);

  const handleRebalance = async (from: string, to: string, amount: number) => {
    setConverting(true);

    try {
      await convertCurrency({
        from,
        to,
        amount,
        successCallback: (result) => {
          console.log('Treasury rebalancing successful:', result);
          // Update treasury state
          updateTreasuryHoldings(from, to, amount, result);
        },
        failureCallback: ({ error }) => {
          console.error('Rebalancing failed:', error);
          // Trigger alert for manual intervention
          triggerTreasuryAlert('REBALANCE_FAILED', { from, to, amount, error });
        }
      });
    } finally {
      setConverting(false);
    }
  };

  return (
    <div className="treasury-dashboard">
      {/* Treasury Overview */}
      <div className="treasury-overview">
        <h2>Treasury Overview</h2>
        <div className="metrics-grid">
          <div className="metric-card">
            <h3>Total Value</h3>
            <span>${treasuryData?.totalValue.toLocaleString()}</span>
          </div>
          <div className="metric-card">
            <h3>Risk Score</h3>
            <span className={riskMetrics?.overallScore < 0.3 ? 'low-risk' : 'high-risk'}>
              {(riskMetrics?.overallScore * 100).toFixed(1)}%
            </span>
          </div>
          <div className="metric-card">
            <h3>Currency Diversity</h3>
            <span>{treasuryData?.currencyCount} currencies</span>
          </div>
        </div>
      </div>

      {/* Currency Allocation */}
      <div className="currency-allocation">
        <h2>Currency Allocation</h2>
        {treasuryData?.allocations.map(allocation => (
          <div key={allocation.currency} className="allocation-item">
            <span>{allocation.currency}</span>
            <span>${allocation.value.toLocaleString()}</span>
            <span>{allocation.percentage.toFixed(1)}%</span>
            {allocation.percentage > 30 && (
              <button
                onClick={() => handleRebalance(allocation.currency, 'USD', allocation.value * 0.1)}
                disabled={converting}
                className="rebalance-btn"
              >
                Rebalance
              </button>
            )}
          </div>
        ))}
      </div>

      {/* Risk Alerts */}
      {riskMetrics?.alerts.length > 0 && (
        <div className="risk-alerts">
          <h2>Risk Alerts</h2>
          {riskMetrics.alerts.map(alert => (
            <div key={alert.id} className={`alert ${alert.severity}`}>
              <span>{alert.message}</span>
              <button onClick={() => dismissAlert(alert.id)}>Dismiss</button>
            </div>
          ))}
        </div>
      )}
    </div>
  );
}