Risks & Mitigations

Users are strongly encouraged to conduct their own research and thoroughly understand the risks associated with Amphor vaults and the broader DeFi ecosystem before using the protocol. Risks and mitigation measures Amphor has implemented to prevent or minimize these risks are outlined below.

Market risk

Market risk encompasses the potential risk tied to broader market conditions, which can include bullish phases, bearish trends, or periods of heightened volatility. Market risk can exert either a negative or positive influence on the fluctuation of underlying asset values over time. These asset values can be determined through their inherent characteristics as well as external factors. Market risk implies the possibility of incurring a loss of principal, which may be partial or, in certain extreme scenarios, even total.

→ Mitigation: Amphor relies on a robust automated on-chain risk management framework, allowing it to monitor whitelisted assets, and protocols and determine optimal vault allocation split. Moreover, the strategy is dynamically managed to offset negative market developments and benefit from positive ones.

Asset de-pegging risk

A pegged asset tracks the underlying asset's price and is redeemable at a 1-to-1 ratio. The de-pegging risk refers to circumstances when the fixed exchange rate, or peg, becomes detached and is no longer maintained. De-pegging events can occur due to factors related to the pegged asset's intrinsic value - insufficient collateral reserve ('backing'), faulty architecture, or external influences such as speculative attacks and exploits. Consequently, an asset's de-pegging can result in significant financial losses.

→ Mitigation: Amphor protocol continuously monitors the market using on-chain tools to anticipate and mitigate the impact of de-pegging events.

Custody risk

User-deposited assets are stored inside the Amphor vault and transferred to the protocol's multi-sig for the duration before being allocated on the relevant whitelisted protocols. The multi-signature wallet securely safeguards user assets throughout the strategy's duration and ensures their return upon maturity.

→ Mitigation: Safe custody is ensured by Gnosis Safe multi-signature solution.

Smart contract

Assets inside the protocol are stored and moved using smart contracts, which undergo thorough audits to prevent vulnerabilities and potential exploit vectors. However, it is important to note that software has the potential to contain flaws despite these precautions. If targeted and exploited, it could lead to a loss of user deposits along with any accumulated rewards at the time of the attack. By engaging with Amphor protocol, the user unilaterally accepts these risks and should not hold the protocol accountable in case an exploit occurs.

→ Mitigation: Protocol smart contracts are audited by multiple third-party firms to minimize the likelihood of potential vulnerabilities. Audit reports are public and available in the following section.