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Risk Taxonomy
DeFi strategies carry inherent risks that cannot be fully eliminated — only understood, measured, and managed. This page documents the risk categories relevant to AlphaYields products and the mitigations in place. Depositors should read this page before committing capital.
Smart contract risk
Mitigation. Deploys exclusively through MORE Vaults, an audited, formally verified execution layer. Strategy facets are isolated from the core — a compromised facet cannot drain the vault. Underlying protocols require completed public audits. Residual: audits reduce but do not eliminate risk.
Oracle risk
Mitigation. Every oracle is registered with a staleness threshold; transactions revert if a feed exceeds it. Non-Chainlink oracles are wrapped and must pass DAO approval. Residual: manipulation on lower-liquidity assets remains systemic.
Liquidation riskayFLOW
Mitigation. Targets 5.2x leverage at ~80% LTV — well below the 97% E-Mode max. Automated deleveraging triggers if health factor falls below 1.1 or the sFLOW/FLOW ratio drops >1%. At target leverage, liquidation requires sFLOW to depreciate ~21% relative to FLOW. Residual: extreme conditions could exceed the response window.
Counterparty / protocol risk
Mitigation. Excludes unaudited protocols, unilateral admin keys, and unresolved incidents. Concentration limits and drawdown thresholds limit single-protocol impact. Residual: governance attacks can outpace monitoring.
Market risk — yield compression
Mitigation. The engine continuously evaluates alternatives; diversification across strategy types reduces simultaneous compression. Residual: market-wide compression affects all strategies at once.
Market risk — liquidity
Mitigation. Liquidity depth is reviewed at verification; positions are calibrated so they never represent a material fraction of available liquidity at target size. Residual: liquidity can withdraw rapidly in stressed conditions.
Bridge & cross-chain risk
Mitigation. LayerZero is among the most battle-tested messaging protocols; assets move to destination chains before shares are minted, so bridge failures delay rather than destroy assets. Residual: cross-chain adds attack surface.
Stablecoin peg riskayUSD
Mitigation. Exposure across multiple stablecoin denominations with concentration limits; drawdown thresholds trigger exit from any depegging position. Residual: a simultaneous multi-stablecoin depeg cannot be ruled out.
What AlphaYields does not protect against
Yield is variable. The mitigations described reduce but do not eliminate these risks. Capital deployed in DeFi strategies may result in partial or total loss.