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DeFi lending carries real risks. Use conservative settings, monitor your health factor, and size positions so you can act under stress.

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Market & Rate Risk

  • Price volatility: collateral can fall fast; keep buffers
  • Correlation: multiple assets can drop together; diversify thoughtfully
  • Interest rates: borrow costs can rise and supply yields can fall

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Liquidation Risk

If HF < 1.0, liquidators can repay part of your debt and take collateral at a discount. Avoid by keeping HF well above 1.0 (1.5+ recommended), setting alerts, and acting early.

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Smart Contract & Oracle Risk

  • Code bugs or integration issues can cause loss
  • Bad or delayed prices can affect HF unexpectedly Mitigate by limiting exposure, spreading risk, and staying informed about updates.

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Operational & Liquidity Risk

  • Network congestion can delay urgent transactions
  • Pool liquidity constraints can limit large withdrawals Plan for emergencies: keep fee tokens and an action plan ready.
This is not financial advice. Never risk more than you can afford to lose.