Risks

The risks related to the protocol may potentially include but are not limited to:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.