⚡Risks

Although we take a multitude of safety precautions and Wault is audited, farming and participating in DeFi comes with certain risks. Below, we discuss the potential risks associated with using Wault.

Risks to Yield Farmers

Risks

We take a multitude of safety precautions. Wault is an audited program. However, farming and participating in DeFi comes with certain risks. Below, we discuss the potential risks associated with using Wault.

Risks to Yield Farmers

Impermanent Loss (IL):

Risk:

  • Risk of (impermanent) capital loss from asset re-balancing in the Automated Market Maker ("AMM") pool.

  • Stablecoin pairs can be subject to impermanent loss, if the price of at least one moves off peg. In general, the Impermanent Loss (IL) from this movement is small and transient. Historically, however, there have been instances where stablecoins have stayed off-peg for extended periods of time. By opening a position with large leverage, you are also amplifying the potential IL on your principal.

Mitigation:

  • Impermanent loss is not unique to Wault Finance. It is common among all yield farming and AMMs. While it’s not possible to completely mitigate IL, users can choose to yield farm asset pairs that have high correlations to minimize potential IL. For more information on IL, you can start with this article.

Smart Contract Risks

⚠ Risk:

  • While the majority of our smart contracts have been audited by multiple third-party firms, they could theoretically have vulnerabilities.

Mitigation:

  • Having smart contracts audited by multiple professional third-party firms decreases the chance of vulnerabilities.

  • You can find our recent audit reports here.

  • We also have an audit on Wault Locker here.

While we do our best to eliminate all the possible risks, DeFi is an industry where events that no one predicted can occur(the dreaded black swans). So please don’t risk assets you cannot afford to lose. We work tirelessly to protect your money. You should do the same. 😊