SECURITY & RISK

Audits and Testing

Harmonix has undergone rigorous audits by Verichains to ensure its smart contracts are secure and robust against vulnerabilities.

Verichains

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Risk Management

1. Impermanent Loss Protection: Delta-neutral strategies minimize exposure to price volatility.

2. Liquidation Avoidance: Strategies are designed to operate within safe parameters, reducing the risk of liquidation.

3. Governance Controls: Decentralized decision-making ensures protocol safety and transparency.

4. Trading Fee Impact Mitigation: Fixed trading fees (0.0366%) incurred during execution are accounted for, ensuring strategies remain efficient despite minor reductions in initial deposit value.

Risk Matrix

Risk	Probability	Impact	Mitigation Strategy
Smart Contract Vulnerabilities	Low	High	Conduct thorough smart contract audits, integrate only well-audited protocols (AAVE, GMX), audited, using real-time audit from Blocksec's Phalcon, Community bugs rewards, $1m in insurance fund.
Oracle Manipulation	Low	Medium	Use highly secure and decentralized oracles (e.g., Chainlink); monitor oracle data feeds for anomalies.
Market Volatility	Medium	Low	Maintain delta-neutral positioning; establish automated monitoring of health factor and leverage levels; use auto-rebalancing tools if available.
Funding Rate Variability	Low	Medium	Diversify across funding rate opportunities where possible; set limits on dependency on short funding fees to avoid over-reliance on one revenue source.
Counterparty Risk with Third-Party Protocols	Low	Medium	Use only well-established protocols with a strong track record (AAVE, GMX); monitor protocol updates, governance proposals, and partnership developments for any adverse impacts.
Collateralization and Liquidation Risks	Low	Medium	Set a minimum health factor threshold (e.g., 1.5); implement automatic system to avoid liquidation.