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Risk Disclosure Overview Using DeFi protocols like Monolith involves various risks. This page outlines the key risks you should be aware of before participating.
Smart Contract Risks Code Vulnerabilities
Despite audits, undiscovered bugs may exist
Complex smart contract interactions can lead to unexpected behavior
Upgrades and migrations carry implementation risk
Oracle Risks
Price feed manipulation
Oracle failure or downtime
Delayed or incorrect price data
Financial Risks Liquidation Risk
Positions can be liquidated if collateral value falls
Rapid price movements can trigger cascading liquidations
Liquidation penalties reduce recovery value
Impermanent Loss
Providing liquidity can result in impermanent loss
Volatile assets increase this risk
Complex yield strategies compound impermanent loss
Interest Rate Risk
Variable borrowing rates can increase unexpectedly
Staking rewards may fluctuate
Protocol revenue sharing can vary
Market Risks Cryptocurrency Volatility
Extreme price movements can affect collateral values
Market crashes can trigger mass liquidations
Correlated assets can amplify losses
Systemic Risk
Interconnected DeFi protocols can cause cascading failures
Large liquidation events can affect broader market
Protocol insolvency can impact all users
Technical Risks Network Congestion
High gas fees during network congestion
Transaction delays and failures
Front-running and MEV risks
Bridge and Cross-chain Risks
Bridge failures can result in lost funds
Cross-chain transactions carry additional risk
Multi-signature requirements add complexity
Counterparty Risks
Smart contract upgrades may introduce new risks
Governance decisions can affect protocol direction
Team changes or disputes can impact stability
Wallet and Custody Risks
Private key compromise
Phishing attacks
Hot wallet security issues
Mitigation Strategies Risk Management
Use appropriate position sizing
Maintain adequate collateral ratios
Diversify across multiple protocols
Stay informed about protocol updates
Security Best Practices
Use hardware wallets for large amounts
Enable 2FA and additional security measures
Verify contract addresses before interaction
Test transactions on testnets first
Disclaimer This is not financial advice. DeFi involves substantial risk of loss. Only invest what you can afford to lose. Always do your own research and consider consulting with financial advisors.
Emergency Procedures In case of critical issues:
Stop all protocol interactions immediately
Monitor official communication channels
Follow protocol team’s guidance
Consider emergency withdrawal procedures if available
Reporting Issues If you discover a security issue, please report it through our Bug Bounty Program rather than publicly disclosing it. 
