Risks

Liquidation Risk

Looping lets you leverage your assets by borrowing against them, which carries liquidation risks. If your loan-to-value (LTV) ratio exceeds a set threshold due to increased debt or a drop in collateral value, your position can be liquidated. This can happen if the interest on your borrowed funds surpasses the yield from your collateral for an extended period or if the LST platform’s smart contract is exploited. Managing these risks is essential to avoid liquidation.

Vaults can be liquidated through an indirect swap, purchasing the debt at a slight discount while simultaneously liquidating the position. Accurate price oracles and sufficient on-chain liquidity are essential for this process, which is actively monitored by the team. Delayed liquidations can worsen losses. iLoop employs a two-tier liquidation system:

• Liquidation Threshold: The point at which a position becomes eligible for liquidation.

• Max Liquidation Threshold: A higher threshold at which 100% of the position can be liquidated to repay the outstanding debt.

Oracle Risk

Oracles are a critical component of DeFi infrastructure. If an oracle provides incorrect data, it can lead to unintended liquidations or improper protocol operations, resulting in bad debt and loss of user funds. iLoop can leverage a range of oracles and specify different oracles for various operations, ensuring the protocol mitigates risks while effectively serving users.

Smart Contract Risk

iLoop has undergone several audits, but unforeseen bugs or errors may still arise, potentially leading to user fund losses or interaction issues with the protocol. To address these risks, iLoop encourages community involvement and offers a bug bounty for identifying and mitigating such vulnerabilities.

Interface Web UI

iLoop consists of a series of smart contracts on the Solana network, which can be accessed through various user interfaces. It is crucial for users to secure their computers and browsers to prevent hacks. Malicious actors may attempt to deceive users, potentially resulting in the loss of funds.

Phishing

iLoop incorporates robust security measures to guard against breaches, including hacks and cyber-attacks. Additionally, users are encouraged to take necessary precautions to secure their assets and interactions with the protocol.