Kandel strategy is subject to some risks that should be taken into consideration. By using Kandel, you acknowledge (i) having the necessary knowledge and understanding of the blockchain technology and the tokens, and (ii) comprehended the risks associated with blockchain-based software systems and tokens, as described below and in the disclaimer.
As a user of the Kandel strategy, you understand that using Kandel can be affected by economic risks, including but not limited to:
- Partial or total loss of the tokens used;
- Partial or total loss of the value of the tokens used;
- Market extreme volatility;
- Insolvency of a third-party platform or company;
- Absence of liquidity and impossible resale on markets of the tokens.
Kandel is a passive market-maker where profit is generated from the spread. An example of impermanent loss on an ETH/USDC pair would be as follows:
- If the current price of ETH/USDC pair moves up, asks will be consumed.
- If the price keeps going up and crosses the max price range value, Kandel strategy will be left only with active bid offers on the ETH/USDC market.
- It is likely that no one would be interested in taking these bids since they would not match the current price (you would be offering too little USDC for ETH, considering the new current price). This is what we call impermanent loss - your strategy stops generating profit from the spread.
Smart contract and technological risks
You understands that even though the strategy has been implemented by an experienced team of researchers and developers, the use of Kandel can be affected by smart contract and technological risks, including but not limited to:
- Security error or failure allowing and/or resulting in hacking and stealing of user, third-party platform and/or website/app data;
- Stealing or loss of the user external wallet private key or his access to the third-party platform;
- Risks associated with blockchains used for the strategy, including but not limited to due to successful attacks from hackers or other criminal groups or organizations or countries, including but not limited to denial of service attacks, Sybil attacks, spoofing, smurfing malware attacks, consensus-based attacks, or phishing, or other new methods that may or may not be known;
- Lack of transparency in crypto asset management and markets;
That being said, please note that the Kandel strategy has been thoroughly audited by ChainSecurity.
Kandel on AAVE exposes users to potential risks associated with AAVE protocol. More details can be found on AAVE documentation.