What are the risks of using Automation?

Written by Nikola J.
Updated 7 months ago

While we approach all development at DeFi Saver with a safety-first mindset, we still believe it's fair to assume that risk exists when interacting with any DeFi protocols and products.

In terms of DeFi Saver, we believe these are the most important types of risks that all users should consider when using automated strategies:

  1. Smart contract risk
    Automation has been online in a few different iterrations since 2019 with no security issues recognised and all DeFi Saver smart contracts have been audited with no issues found, but it's always fair to assume that smart contract risk exists. For those interested, previous audit reports can be found in our development docs.
    In order to limit any potential risk surface, we take extra precautionary measures at the smart contracts level, such as having on-chain verification of triggers and user configured thresholds, as well as on-chain verification of transaction outcomes.
  2. Technical risk
    There are a number of factors outside of our control that may prevent automated adjustments from being executed in a timely manner, including network congestion, RPCs (e.g. Alchemy, Infura) and APIs (e.g. 0x or Paraswap dex aggregators and gas APIs) availability.
  3. Upgradeability risk
    A number of parts of the DeFi Saver smart contracts architecture are upgradeable through team multisigs. While this is currently standard practice in most protocols and apps, we fully agree this is something that should be properly disclosed and easily trackable by users.
    You can read more about upgreadability of DeFi Saver smart contracts in our development docs here and you can track contract upgrades in our new Stats dashboard here.
  4. Market risk
    Although our automated strategies, and especially various liquidation protection options, weathered through a number of large market crashes without issues or delayed transactions in order to successfully keep users' positions safe, it's also fair to assume that an event may occur where a market change happens so quickly that Automation fails to react in a timely manner. Besides actual market movements, this might also happen due to oracle or protocol level issues and potential exploits.
Historically speaking, as of March 2023, there have been over 65,000 automated transactions executed on behalf of DeFi Saver users.
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