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.

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.