Overview
DeFi protocols involve inherent risks. While Centuari implements multiple safeguards, users should understand these risks before participating.Smart Contract Risk
Smart contracts may contain bugs or vulnerabilities that could lead to loss of funds. Mitigations:- Multiple independent security audits
- Open-source code for community review
- Active bug bounty program
- Formal verification of critical components
- Timelock on protocol upgrades
Oracle Risk
Centuari relies on external price feeds to value collateral and trigger liquidations. If an oracle provides incorrect data, it could result in improper liquidations or under-collateralized positions. Mitigations:- Decentralized oracle solutions (Chainlink)
- Multiple oracle sources with fallback mechanisms
- Circuit breakers for extreme price deviations
- Governance-managed oracle configuration
Collateral Risk
Collateral assets can lose value rapidly, potentially leading to under-collateralized positions and bad debt. Mitigations:- Conservative loan-to-value (LTV) ratios per asset
- Liquidation thresholds with safety margins
- Real-time health factor monitoring
- Tiered collateral categories based on asset risk profile
- Automatic liquidation mechanisms
Liquidity Risk
The order book may have insufficient liquidity for large orders to fill promptly. During periods of market stress, liquidity may decrease. Mitigations:- Idle Yield Router keeps capital productive while waiting for matches
- LP incentive programs to attract market makers
- Partial fill support for large orders
- Cross-chain liquidity aggregation increases available capital
Bridge and Network Risk
Cross-chain deposits involve bridging assets, which introduces additional smart contract and network risks. Mitigations:- Only established, audited bridge protocols are supported
- Governance review required before adding new networks
- Settlement on Arbitrum for low fees and fast finality
- Monitoring systems for bridge health and delays
Maturity Risk
Fixed-rate positions have defined maturity dates. Borrowers who fail to repay or refinance at maturity face liquidation. Lenders who do not enable auto-rollover must manually manage position expiry. Mitigations:- Auto-rollover for lenders (enabled by default in Easy Mode)
- Auto-refinance for borrowers (enabled by default in Easy Mode)
- Grace periods before liquidation at maturity
- Dashboard notifications and alerts before maturity
- Multiple active maturity dates to choose from
Risk Parameters
Centuari maintains risk parameters that are regularly reviewed:| Parameter | Purpose |
|---|---|
| LTV Ratio | Maximum borrowing power per collateral type |
| Liquidation Threshold | Point at which positions become liquidatable |
| Liquidation Penalty | Fee charged on liquidated collateral |
| Health Factor | Real-time safety metric for borrower positions |
| Protocol Reserve | Fund to cover potential bad debt |
User Responsibility
Users are responsible for:- Understanding the risks before depositing funds
- Monitoring their positions, especially health factors for borrowers
- Managing maturity dates and auto-feature settings
- Keeping collateral ratios at safe levels