🤏Risk

We're transparent to our users. Go through these inevitable risks as you engage in crypto

Funding risks

While funding rates are generally positive over the past few years, there are times when funding rates trade negative.

Liquidity and margin risk

While return on the basis trade is virtually guaranteed over the long term, short-term fluctuations can lead to significant losses as seen in highly leveraged positions in both traditional markets or crypto markets. The protocol’s strategy is exposed to similar risk.

Collateral Risk

The protocol has the option to hold staked tokens or liquid staked tokens (LST) in various tokens, rather than solely relying on the native token. This strategy aims to generate additional yield. However, there is a risk: if the prices of these assets deviate from their peg, it could result in the collateral value falling below the required margin for the delta-neutral strategy.

Exchange risk

• The protocol intends to utilize Off-Exchange Settlement providers with no collateral being deposited with any exchange.

• The protocol also intends to utilize technology such as MPC wallets to mitigate Defi risks to a certain extent.

• The protocol further diversifies the risk and mitigates the potential impact of exchange failure by utilizing multiple exchanges.

Custodial risks

As assets are stored with off-exchange settlement providers and MPC wallets, there are inherent custodial risks if the custodian were to become insolvent.

Smart contract risks

Bridge risk. Some protocols will require Bridged tokens and these may depend on the security of the bridge while pegged tokens have risks of depegging

The protocol has the option to hold staked tokens or liquid staked tokens (LST) in various tokens, rather than solely relying on the native token. This strategy aims to generate additional yield. However, there is a risk: if the prices of these assets deviate from their peg, it could result in the collateral value falling below the required margin for the delta-neutral strategy.