A Tiered Framework is a structured organizational or architectural model that categorizes elements into distinct levels based on criteria such as importance, functionality, or access permissions. In crypto, this framework applies to risk management systems, user access controls, or infrastructure design. It segments components to enhance security, scalability, or regulatory adherence.
Mechanism
The mechanism involves defining clear boundaries and interaction rules between each tier. For instance, in a security context, higher tiers might require stricter authentication and authorization protocols, while lower tiers handle less sensitive operations. Data flow and control often move sequentially between tiers, enforcing separation of concerns and limiting the blast radius of potential failures within the system.
Methodology
The strategic purpose of a tiered framework is to impose order and control within complex systems, enabling granular management of resources and risks. This methodology improves fault isolation, simplifies maintenance, and allows for differentiated service levels or security postures. In institutional crypto trading, it structures access to trading systems, segregates client assets, and categorizes risk parameters, thereby bolstering operational integrity and compliance.
A Best Execution Committee adapts metrics by creating a tiered system that maps quantitative and qualitative measures to a security's specific liquidity and transparency profile.
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