All defi protocols carry risks, so it is important to clearly understand the risks before depositing large amounts of money, as listed below are the possible risks associated with using Aptin.
The systemic risk is the depreciation of the deposited token. Due to the large fluctuations in the virtual currency market, we cannot guarantee that the price of the token will continue to be constant. Therefore, you need to bear the risk of the depreciation of the token yourself.
Smart Contract Risk
Contractual vulnerabilities are one of the main reasons why hackers steal funds from platforms, which is a challenge for all Defi programs, but can still be prevented in advance in a number of ways.
- Aptin will complete the code audit prior to the mainnet launch.
- Aptin will cooperate with more security companies to continuously audit the contract code for security vulnerabilities and protect user funds.
100% Utilization Risk
When an asset is fully utilized (100% of supply is lent out), there are no tokens left in the pool, which means that withdrawals and borrows will fail. Users have to wait until the utilization rate goes down, either through some users repaying their loans or depositing new funds.
A user is more likely to be affected by this if their deposit represents a large share of the pool, or if the asset has extremely high borrow demand.
Aptin relies on Pyth and Switchboard for their price feeds to power liquidations. There is a risk that these oracles report incorrect prices, causing wrongful liquidations.
Aptin offers over-collateralized loans, which means loans must be backed by collateral of greater value than the loan. If the value of the collateral dips below a threshold (determined by asset LTVs), a user's position will be liquidated with a liquidation penalty.