Risks
At zkSynth, we believe in transparency and aim to ensure that our users are fully aware of the risks associated with using our platform. Below are some of the potential risks that users and investors should be aware of
Smart Contract Risk
Although our smart contracts have been thoroughly audited, there is always a possibility of unknown loopholes or bugs that can potentially lead to the contract getting hacked. This could result in the loss of funds or assets. However, we constantly monitor and update our contracts to ensure maximum security.
Market risk
The decentralized finance market can be volatile, and in such conditions, the value of collaterals can decrease while the value of debt increases. This could lead to accounts being liquidated, resulting in bad debt. To minimize this risk, we segregate assets based on their market risk and closely monitor market conditions. We adjust the market LTV (loan-to-value) ratio based on the volatility of the market.
Third-Party Risks
We rely on Chainlink's decentralized oracle system for price feeds. In case of any failure in the price reporting, the system could potentially suffer losses. To mitigate this risk, we have a fallback oracle maintained by zkSynth. It's important to understand that investing in synthetic assets carries inherent risks. We advise users and investors to do their due diligence, understand the risks involved, and invest only what they can afford to lose. We are committed to maintaining a safe and secure platform for our users and will continue to work towards minimizing the risks associated with our protocol.