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 can contain software bugs or other vulnerabilities within the protocol code and the underlying reserve tokens. To mitigate these risks, Const’s code is publicly available for audit.

Oracle Risk

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

Collateral Risk

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

Network / Bridge Risk

Const operates across multiple EVM based blockchain networks and bridges, each with potential risks. To mitigate these risks, the Const team and the community audit all the networks and bridges carefully.