Risks

Oracle Risk

Basically, Evoq uses the same price oracle as the underlying lending protocols. If an oracle malfunctions or reports incorrect data, it can cause cascading liquidations or protocol errors, leading to bad debt and loss of user funds.

Liquidation Risk

Liquidation doesn't depend on the protocol or any specific members involved. Liquidators are third-party operators open to anyone. Despite economic incentives, sometimes liquidators can malfunction or fail to perform. This can lead to under-collateralization of the protocol and result in bad debt. To address this, a portion of the protocol reserve is allocated to a risk fund to prepare for unexpected losses.

Smart contract Risk

Smart contract risk involves vulnerabilities in automated contracts, such as coding errors and oracle manipulation, which can lead to unauthorized withdrawals, cascading liquidations, and financial losses. Users should be aware of these risks and take responsibility for reviewing the security of smart contract.