Risks

What are some of the risks?

Decentralized Finance and products like Instadapp Lite are uniquely designed and we recommend users take time to fully understand the mechanisms and unique risk to using DeFi Applications.

What are the risks of using Instadapp Lite?

Instadapp Lite harnesses multiple DeFi protocols and strategies to generate passive yields, but it comes with inherent risks including smart contract bugs, market volatility, and vulnerabilities such as oracle or price manipulations.

By utilizing staked assets and leverage, Instadapp Lite aims for high yields, but users should be aware of the associated protocol, smart contract, and market risks involved.

Sustainable Yields

We strive to create a sustainable and long lasting product, as such Instadapp Lite is built on long established DeFi protocols and handles highly liquid DeFi strategies. This ensures that under any market conditions vaults can be safely deleveraged or adjusted with minimal to no loss. Under unfavorable deleveraging events the vaults may incur losses.

Rebalances and Temporary Losses

Vaults can be deleveraging through our automation server. If vault gets risky it can first refinance into another protocol to maintain safety, or it can deleverage by selling stETH and paying back ETH debt. This kind of automation, if required or occurs, may incur losses caused by trading slippage.

DeFi Legos: Multiple Protocol Usage

Instadapp Lite utilizes multiple protocols to create one strategy; utilizing more protocols creates more inherent risks by utilizing more code and dependencies. For users to fully understand the risks associated with utilizing a complex Defi Lego they must be able to evaluate the risks associated with their components. Instadapp Lite uses leading lending protocols like AAVE, Euler, Compound, Morpho etc.

At any time the vault may have a part or all of its assets in any particular protocol. If an underlying protocol used by the vault were to incur losses, users would assume losses in proportion to the funds supplied to that protocol by the vault. We advise users to learn more about these protocols to fully understand their individual risk profile to better understand their risk when they are utilizing in conjunction and used on Instadapp Lite.

Derivative Asset backed Token

Staked Ethereum from Lido is a derivative product of ETH backed by 1 ETH on the Etheruem beacon chain. stETH is a tokenized staking deposit on Ethereum that allows users to earn staking rewards for their ETH holdings. stETH provides a convenient way to earn passive income from staking and creates a DeFi lego we built upon.

Leverage Strategy

Instadapp Lite utilizes a recursive strategy with stETH on lending protocols, enabling borrowing against ETH. Users should be aware of the risks involved in leveraged strategies. Leverage in DeFi can provide increased asset exposure but also requires careful consideration due to the unique nature of code-based governance and on-chain lending markets.

Automation and Autonomous Execution

Instadapp Vaults have automation functions which automatically rebalance the vault during market changes. Automations are executed on chain and carry their own inherent risks such as price oracles issues, smart contract bugs or other blockchain or other technical errors.

Governance Changes to Underlying Protocols

Instadapp Lite leverages various DeFi protocols, each governed by its own system. The Lite Vaults may need to adjust to unforeseen changes in these underlying protocols, which are beyond calculability. Users of Instadapp Lite understand and accept that Governance or the Instadapp team may make necessary changes in response to the independent protocols.

DAO Governance

The Instadapp Lite vaults are managed by DAO governance. Governance can set parameters and ranges for leverages within protocols. Governance may approve or remove protocols from the vaults available strategies.

Governance can also assign Rebalancers a permissioned role which can leverage and refinance the vault within the parameters set by Governance. Rebalancers do not have the ability to withdraw funds from the vault.

Team Multi-Sig has some limited and emergency management access. The Team Multi-sig does not have access to funds and cannot withdraw ore move funds. The team multi-sig can reduce the ratio set for a particular protocol, temporarily pause withdrawals and pause rebalancing; these functions do not change ownership of the assets in the vault.

Team Multi-Sig: 0xa8c31E39e40E6765BEdBd83D92D6AA0B33f1CCC5

By using Instadapp Lite you agree to the risks and accept any changes the team may implement to the vaults such as any parameters, settings or changes to code, etc.