Risks

The Const Protocol strives to provide asset security to the best of its ability, but it is not without risks. Here are some potential risks:

Smart Contract Risk

Smart contracts may contain software bugs or vulnerabilities in the protocol code or the underlying reserve tokens. To mitigate these risks, Const’s code is publicly available for audit.

Oracle Risk

Const relies on third-party oracles for token price feeds and external data. This dependency introduces risks such as incorrect valuations if an oracle fails or is compromised. To reduce this risk, Const uses decentralized oracles like Chainlink, which offer tamper-resistant data feeds, greater reliability, and enhanced security.

Collateral Risk

The value and liquidity of collateral assets can fluctuate, leading to risks of under-collateralization or bad debt. Const mitigates this by setting key parameters such as loan-to-value (LTV) ratios and liquidation thresholds. These parameters are continuously monitored by liquidators and may be adjusted by Const governance in response to market conditions.

Network / Bridge Risk

Const operates across multiple EVM-based blockchains and bridges, each with its own risks. To mitigate these, the Const team and community carefully audit all networks and bridges involved.