Risks

TLDR; DeFi is risky.

General economic risks

Please be aware that the value of Cryptoassets and Tokens can fall as well as rise. If you deal in Cryptoassets or Tokens other otherwise use our Services, you may lose value, and you may lose the full value of your participation. The value of Cryptoassets and Tokens depend on fluctuations in the financial markets, or other economic factors, which are outside our control. The past performance of a Cryptoassets and Tokens is not a guide to the future performance.

Volatility risk

Cryptoassets and Tokens are subject to significant price volatility. The prices of cryptoassets generally have historically been subject to dramatic price fluctuations and are highly volatile. A range of factors may influence the market price, if any, of Cryptoassets and Tokens, including, but not limited to: (i) the ability (if any) of Cryptoassets and Tokens to trade on a secondary market; (ii) global supply and demand (iii) general expectations with respect to the rate of inflation, interest rates and exchange rates; (iv) changes in the software, software requirements or hardware requirements underlying Cryptoassets and Tokens; (v) changes in the rights, obligations, incentives, or rewards for holders of Cryptoassets and Tokens;(vii) interruptions in service from or failures of exchanges on which Cryptoassets and Tokens are traded; (viii) investment and trading activities of large purchasers, including private and registered funds, that may directly or indirectly invest in Cryptoassets or Tokens; (ix) monetary policies of governments, trade restrictions, currency devaluations and revaluations; (x) regulatory measures, if any, that affect the use of Cryptoassets and Tokens and changes in Applicable Law; (xi) global or regional political, economic or financial events and situations; and (x) expectations among participants that the value of a particular Cryptoasset or Tokens or cryptoassets generally will soon change. A decrease in the price of a single cryptoasset may cause volatility in the entire cryptoasset industry and may affect the Cryptoassets and Tokens you deal in our Services. Volatility in the price of Cryptoassets and Tokens may result in significant loss over a short period of time.

Risks in relation to third parties

Whilst our Services enable you to access the services of third parties, such as Third Party Lenders and Yield Farms, the services and products provided by such third parties are subject to their own particular risks. We may not have done any due diligence on the third parties you may access via our Services, and for example a third party may be selected as a result of an Allocation Proposal submitted by a Supply Token holder and not by us. In using our Services, you understand that we are not responsible for the risks of using the products and services provided by third parties, and it is your responsibility to ensure that you understand and accept them as relevant to your use of our Services, including by conducting your own appropriate due diligence.

Risks in relation to the Yield Generation Process and Vaults

Once a Vault and Yield Generation Process has been set up, we do not exercise any discretion in relation to its operation. As such, absent an approved Allocation Proposal, we are unable to adapt an existing Vault or Yield Generation Process to take account of market changes or issues that arise. The passing of an Allocation Proposal may take time, and we are not responsible for any loss caused by any delay as a consequence. Furthermore, Supply Token holders suggesting an Allocation Proposal have not been vetted by us and may lack experience or competence. In any event, if an Allocation Proposal is passed, we will generally be required to pass it and so are not responsible for any loss, or failure to make a gain, as a result of implementing any Allocation Proposal.

Risk of losing access to Cryptoassets and Tokens due to loss of private key(s)

A private key, or a combination of private keys, is necessary to control and dispose of Cryptoassets and Tokens. Accordingly, loss of requisite private key(s) associated with your Wallet or smart contract storing Cryptoassets and Tokens will result in loss of them. Moreover, any third party that gains access to such private key(s), including by gaining access to login credentials of a hosted wallet service you use, may be able to misappropriate your Cryptoassets and Tokens. You, and not we, are responsible for safekeeping your private key(s).

Risk of issues with your Wallet

You are responsible for ensuring that your Wallet is compatible with our Services and Tokens. Any errors or malfunctions caused by or otherwise related to your Wallet, including your failure to properly maintain or use such Wallet, may also result in the loss of your Cryptoassets and Tokens. It is your, and not our, responsibility to obtain, maintain and secure your Wallet, which must be compatible with holding the Cryptoassets and Tokens you deal in.

Regulatory risks

Regulation of Cryptoassets, Tokens and the use of blockchain technologies generally is currently still being developed and likely to rapidly evolve. Regulation varies significantly between different jurisdictions and is subject to significant uncertainty. Regulators may in the future adopt laws, regulations, guidance or other actions that may severely and adversely impact Cryptoassets, Tokens or our Services generally. This could result in a variety of adverse consequences and reduce the value of Cryptoassets and Tokens. It may also limit our ability to operate / provide our Services and Tokens in particular jurisdiction(s).

Risks associated with the blockchain protocol

Because Cryptoassets, Tokens and our Services generally are reliant on blockchain protocols, any malfunction, breakdown or abandonment of the blockchain protocol may have a material adverse effect on Cryptoassets, Tokens and our Services generally. Moreover, advances in cryptography, or technical advances, such as the development of quantum computing, could present risks to Cryptoassets, Tokens and our Services generally by rendering ineffective the cryptographic consensus mechanism that underpins the blockchain protocol.

Risk of hacking and software and security weaknesses

Hackers or other malicious groups or organizations may attempt to interfere with Cryptoassets, Tokens and our Services generally in a variety of ways, including malware attacks, denial of service attacks, consensus-based attacks, sybil attacks or smurfing and spoofing.

There may also be attacks attempting to overpower the consensus-based mechanism on which the blockchain in built and attacks which interfere with or otherwise cause nodes to malfunction (nodes are computers / hardware devices that help maintain the blockchain).

There is an inherent risk that the software and related technologies and theories we use in connection with our Services and Tokens could contain a Virus. A Virus could cause, inter alia, complete loss of Cryptoassets and Tokens. In addition, because Cryptoassets and Tokens may be based on open-source software, there is a risk that someone may intentionally or unintentionally introduce a Virus into the core infrastructure supporting Cryptoassets or Tokens, which could negatively affect their operation and / or value.

Forks and Airdrops

The underlying protocols of Cryptoassets may be subject to substantial changes in their operating rules (called a “forks”), and these may alter the value or function of a Cryptoasset. A fork may result in multiple versions of a Cryptoasset, leading to volatility as one version becomes dominant over another, which may lose its value.

There may be distributions made to holders of a particular Cryptoasset, for example of a new variant of a Cryptoasset (called an “airdrop”), and the event of an airdrop may also impact the value of the Cryptoasset(s) affected.