Risk
Providing liquidity on kibblefarm.xyz is not without risks. Please donât supply your life savings, or assets you canât afford to lose, to kibblefarm.xyz .
Liquidity Provision and Deposits to Vaults
When providing liquidity on app.ichi.org, you are exposed to many risks:
Smart contract issues
Market, trading, liquidity, and exchange risks
Vaults are highly risky as they allow for single sided liquidity deposits, and use those to deposit to a liquidity pool. This means deposits are subject to all risks of providing liquidity on an Automated Market Maker (AMM) including but not limited to Impermanent Loss, loss of all funds due to a hack of the contract, negative IRRs, etc. Please do your own research before depositing.
Deposit Token Denominated Loss: Our system deploys capital into UniSwap V3 liquidity pools with the goal to accumulate more of the deposit token. When the FX rate between deposit token and the paired token hovers within a price range or when the paired token grows in value, the vault is able to consistently accumulate the deposit token. Even when the deposit token grows in value, the rebalancing token allocation helps the vault get back to the healthy state quickly when the deposit token value retracts. However, under extreme circumstances, when the deposit token grows in value quickly as compared to the paired token and doesnât retract (for example, when the paired token gets hacked and loses all its value), the user would suffer deposit token denominated loss. Note that the extreme volatility state would be triggered in this situation and mitigate some loss.
USD Denominated Loss: Our System is designed to accumulate more of the deposit token. Therefore, the user may suffer USD denominated loss when the deposit token price drops significantly. Additional measures to hedge the deposit token price risk may be warranted at the portfolio level depending on the userâs needs and objective.
Minting
Smart contract issues, bugs, or economic loopholes/exploits with the protocol
Risks with the digital assets used as collateral, typically stablecoins:
USDT risks: https://tether.to/legal/
Market, trading, liquidity, and exchange risks associated with non-collateral, cryptocurrency assets
Governance risks: Governance could make poor decisions on treasury management or important stable coin parameters, such as minimum reserve percentage
Last updated