DeFi risks and mitigations

Decentralized Financed (DeFi) is a relatevely recent financial paradigm that leverages the security and decentralisation of the blockchain technology.

Any DeFi protocol is therefore developed by a team of experts (in our case the FluidTokens team, made of senior and well known blockchain developers) which has no control over the executions of the code after deployment.

DeFi brings the following risks and that’s how we’re mitigating them:

• Security bugs in the smart contract code: a bad actor could find a security vulnerability and steal the assets held in the smart contract. On Fluidtokens we have strongly tested all the possible states of each contract for months before release, including periods of incentivized testnets. Official security audits have also been conducted by well-known audit firms.
• Malevolous code inside the smart contract: the team could have placed secret bad code inside the contract to run away with anything locked inside. On FluidTokens this is not the case: the whole team is well recognized within the Bitcoin and Cardano communities and it has been working on Blockchain since 2019. Several millions of US Dollars in cryptocurrencies have been moved as volume so far on our platform, completely safely.

Our smart contracts are also open source, to guarantee full transparency and fairness.

• Underlying blockchain decentralization: a too centralized blockchain can expose the users to well known attacks and can reduce the value of the native cryptocurrency to zero. Bitcoin and Cardano are nowadays the most decentralized and well balanced public blockchains, sharing the same strong architecture called UTxO.

Even with all our solutions and mitigations described above, please remember to invest only the amount you can afford to lose. We also suggest to learn how to properly diversify your crypto investements to protect your overall wealth.