Risks and Safety

Potential Risks

1. Smart Contract Vulnerabilities: As with any DeFi protocol, there is a risk of bugs or vulnerabilities in the smart contracts that could be exploited by malicious actors.

2. Impermanent Loss: Liquidity providers may experience impermanent loss, which occurs when the price of deposited tokens changes compared to their initial ratio, potentially resulting in a loss of value when withdrawing.

3. Market Volatility: Rapid and significant price changes can affect liquidity positions, leading to potential losses or reduced returns.

4. Liquidity Pool Risks: Providing liquidity to AMMs carries risks such as slippage, arbitrage, and reduced liquidity during market downturns.

Corresponding Safety Measures

1. Regular Audits: ICHI undergoes continuous security audits by reputable firms like Quantstamp, Solidified, and CertiK to identify and mitigate potential vulnerabilities.

2. Automated Risk Management: ICHI’s Vault Algorithm includes automated risk management features that dynamically adjust liquidity positions based on over 25 market indicators to mitigate impermanent loss and market volatility.

3. Chainlink Keepers: The use of Chainlink Keepers ensures reliable and efficient execution of onchain tasks, reducing the risk of manual errors and enhancing the overall security of the protocol.

4. Extreme Volatility State: In cases of extreme market volatility, ICHI can lock vaults to prevent further deposits, requiring human intervention to reassess and rebalance, thereby protecting users' funds.