Since each pool contains a group of protocols, minimizing the risk of multiple protocols getting hacked would be one of the key factors to ensure solvency. The correlations among different protocols are carefully analyzed to maximize the diversification efficiency.
Protocols that don’t rely on other protocols could be utilized in diversification with a higher exposure allowance to LP’s capital, e.g. COMP, Aave, Uniswap. However, protocols that rely on other third party protocols being operational, e.g. Yearn (YFI) and other DeFi yield aggregators, would have a higher dependency risk factor, hence a lower exposure allowance could be adopted for higher risk protocols.