Trading Risks

Caution should be exercised when interacting with any smart contract or blockchain application. While risks are attempted to be mitigated through testing, audits and bug bounties, there is always a risk of vulnerabilities in smart contract code.

A non-exhaustive list of risks:

  • Smart contract risks

  • Liquidations

  • ADLs (Auto Deleveraging)

Additionally, collateral and profits may be backed by bridged or pegged tokens which may not be guaranteed to maintain peg.

Stablecoin Pricing

In case the price of a stablecoin depegs from 1 USD:

  • To ensure that profits for all short positions can always be fully paid out, the contracts will pay out profits in the stablecoin based on a price of 1 USD or the current Chainlink price for the stablecoin, whichever is higher.

  • For swaps using the depegged stablecoin, a spread from 1 USD to the Chainlink price of the stablecoin will apply.

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