Risks

Understanding Risks

Avant Protocol is engineered with a multi-layered security and risk management framework. However, like any platform in Decentralized Finance (DeFi), interacting with the protocol carries inherent risks. We believe in transparency and want our users to be fully aware of these potential risks.

This document provides an overview of the primary risk categories and summarizes the measures in place to mitigate them.

Smart Contract Risk

• The Risk: A vulnerability in Avant's own smart contracts, or in the external smart contracts the protocol interacts with, could potentially be exploited by a malicious actor.

• Mitigation: Avant's contracts are intentionally designed with low complexity to minimize the attack surface. All contracts undergo multiple, independent audits by leading security firms before deployment. Furthermore, all external protocols are subject to a rigorous due diligence process.

  Learn more on our Contract and OPSEC Audits page.

Strategy & Market Risk

• The Risk: The underlying yield strategies may temporarily underperform or incur losses due to adverse or unexpected market conditions (e.g., periods of negative funding rates for basis trades).

• Mitigation: The protocol utilizes a diversified, multi-strategy approach to avoid over-reliance on any single source of yield. Strategies are actively managed to adapt to changing market conditions. The Junior Tranche (avUSDx) is also designed to absorb initial losses, shielding savUSD holders from short-term volatility.

  Read about our Yield Generation strategies and Risk Management framework.

Custody & Operational Risk

• The Risk: This includes risks associated with the custody of protocol assets, potential human error, or the operational control of the protocol.

• Mitigation: This risk is managed through several layers. Assets are held in institutional-grade Multi-Party Computation (MPC) wallets that eliminate single points of failure. A robust framework of internal controls, transaction policies (such as address whitelisting), and role-based access is strictly enforced to prevent unauthorized actions and minimize operational errors.

  Details are available on the Secure Asset Management and Operational Security pages.

Liquidity & Redemption Risk

• The Risk: In a scenario where an exceptionally large volume of avTokens is redeemed simultaneously, users may experience delays in the withdrawal process.

• Mitigation: The protocol is designed to manage outflows predictably through an unstaking cooldown period. While most withdrawal requests are expected to be processed promptly after this cooldown, very large redemptions may require additional processing time to ensure assets are sourced and transferred in a secure and orderly manner.

Counterparty Risk

• The Risk: An external DeFi protocol that Avant's strategies are integrated with could experience an exploit, a failure, or another adverse event, impacting the capital allocated to it.

• Mitigation: The protocol limits its exposure to any single counterparty through strict diversification and allocation rules. Furthermore, all external protocols are vetted through our extensive due diligence process and are monitored 24/7 for real-time threats.

  This is covered in our Risk Management and Operational Security documentation.

This overview is for informational purposes and, while it covers primary risk factors, it does not claim to be complete, and other unforeseen risks may exist. All investments carry risk, and we encourage users to understand these factors fully and invest responsibly.