Security & Risks

Make sure to understand what you are doing.

Decentralized Finance is very young. We like to compare it with the Wild West or the early days of the internet. For this reason, we believe it is really important for users to understand the risks involved. Do your own research under all circumstances. This page is intended to provide a brief overview of the risks associated with using a liquidity aggregator.

General DeFi Risks

DeFi poses a wide range of risks, such as falling for fraud or having private access keys stolen, having your wallet emptied, etc. Therefore, DeFi users need to constantly educate themselves carefully and make sure that their computer does not contain malware.

Liquidity Mining Risks

Liquidity mining with non-stable coins carries a major risk: Impermanent Loss. This happens when one currency in a liquidity pool (hive) loses value compared to the other, and the balance between the two coins is skewed in favor of the worse performing token.

The Swiss Federal Institute of Technology (ETH Zürich) published a paper on that topic. They found out that “normal” miners make around 0% gains at the end of the year - due to exactly that issue (impermanent loss).

Grizzly.fi has its focus on stable coin pools where this cannot happen. When both currencies in a pool (Hive) are pegged to the same value (e.g. USD) the distribution between the two hasn’t got any effect.

Price Impact

If you are investing in a Hive with very low liquidity with only one currency, you can lose money due to the AMM mechanism of decentralized exchanges. Always check the liquidity depth first before you invest, especially when you invest larger sums.

Smart Contract Risks

Smart contracts are a set of rules for how transactions should be executed on a blockchain. Such sets of rules (codes) may contain vulnerabilities that could be exploited by hackers and attackers.

Grizzly.fi places a very high value on security and has had the Smart Contract very carefully reviewed by security experts and several auditing firms.

3rd Party Risks

Grizzly.fi is a liquidity aggregator platform; this means people don't invest IN grizzly.fi they invest THROUGH grizzly.fi. We simply help the user gathering multiple platforms in one organized place and do the optimizing of the capital for them to generate higher yields.

This also means that the security measures on the foreign platforms and their protocols may have flaws that can be exploited and affect some of our hives. Grizzly.fi has no direct influence on the security measures of the third-party platforms with which Grizzly.fi cooperates. However, to prevent Grizzly.fi users from losing money, we only support protocols that have been rigorously tested by top-notch security firms. In addition, our security experts also put each supported protocol through its paces themselves.