Risks
The risks related to the protocol may potentially include but are not limited to:
Oracle Risks:
Dependency on external price oracles for asset valuations, which can introduce vulnerabilities such as inaccurate or manipulated data.
Potential for oracle failures or manipulation leading to incorrect pricing and consequent liquidations or incorrect interest rate calculations.
Smart Contract Risks:
Vulnerabilities in smart contract code could lead to exploitation by malicious actors, resulting in loss of funds or disruption of protocol operations.
Possibility of bugs or vulnerabilities in the protocol's smart contracts, which could be exploited to manipulate or disrupt the protocol.
Insolvency Risks:
Risk of insolvency due to sudden market fluctuations or extreme volatility, leading to undercollateralization of loans and potential losses for lenders.
Failure of borrowers to maintain adequate collateralization, resulting in liquidations and potential losses for lenders.
Market Risks:
Exposure to market risks such as price volatility, liquidity fluctuations, and systemic risks inherent in the broader cryptocurrency market.
Potential for unexpected changes in market conditions or regulatory environments affecting the value and stability of assets within the protocol.
Counterparty Risks:
Risk of default or non-performance by counterparties, including borrowers, suppliers, or liquidators, which could lead to losses for other participants in the protocol.
Regulatory Risks:
Exposure to regulatory risks arising from uncertain or evolving legal frameworks governing decentralized finance (DeFi) protocols, which could result in regulatory enforcement actions or compliance challenges.
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