Risks

Smart contract risk

Strobe Protocol is doing its best to write secure and safe smart contracts. It has undergone thorough audits and testing, and reports have been posted here. However, in case where someone takes advantage of an exploit that was not uncovered beforehand, it is possible that the funds may be affected.

Liquidation risk

This risk only applies to borrowers. When the health factor of borrowers falls below 1, a liquidation may happen to seize the collateral of the borrower at a discount in exchange for the repayment from the liquidator. When this happens, the borrower will lose more collateral than his debt that was repaid for.

Market risk

Market risk refers to the risk of losses due to changes in market conditions that affect the value of assets held within the protocol. This can be due to fluctuations in interest rates, asset prices, or overall market volatility.

Platform risk

Platform risk involves the potential risk associated with the malfunction or security vulnerabilities of the underlying technology or platform on which the DeFi protocol is built. This includes risks from blockchain networks (i.e. XRPL, EVM Sidechain, and Axelar Network), such as congestion, forks, or bugs that may affect the operations of the Strobe Protocol. All inherent risks when bridging are still present.

Price oracle risk

Price oracle risk involves the potential risk associated with the malfunction or security vulnerabilities of the underlying technology or platform on which the DeFi protocol is built. This includes risks from blockchain networks, such as congestion, forks, or bugs that may affect the operations of the Strobe Protocol.

Axelar asset risk

Currently, Strobe Protocol uses XRP, USDC, and ETH price feeds from Band Protocol for XRP, axlUSDC and axlETH respectively. In case of a security incident on Axelar, there is a chance that axlUSDC and axlETH will get depegged heavily from the price of USDC and ETH.

Please Note: Axelar does not support cross-chain transactions with destination tags when returning funds to the XRPL. Wallets with the following enabled are unable to withdraw and will be restricted from using the protocol while these are enabled: lsfDepositAuth, lsfDisallowXRP, lsfRequireDestTag

Midas asset risk

Currently Strobe Protocol provides access to borrowing by collateralizing mXRP from Midas. In the event of Midas mXRP destabilizing or depegging from the expected ‘XRP+Interest’ Midas supplied price feed, assets loaned against mXRP could be at risk.