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Risks
All DeFi protocols, including Blueberry, come with risks, which are important to understand before depositing significant amounts of crypto. Some of the main risks involved in using Blueberry are outlined here.
Smart Contract and UI Risk
There is a risk that the smart contract or UI has a bug or exploit for unexpected behavior resulting in loss of funds. This risk is inherent to all smart contracts and relies upon the discipline of the development community, core contributors, and auditors.
Blockchain Risk
The Ethereum blockchain remains under development, which creates technological, uncertain, and security risks that Blueberry has no control over. The cost of transacting on the Ethereum blockchain is variable and may increase or decrease at any time causing an impact on any activities taking place on the Ethereum blockchain, which may result in losses, price fluctuations, or increased costs.
Oracle Risk
Blueberry relies on Chainlink for its main price feeds to power liquidations. There is a risk that these oracles report incorrect prices which can result in wrongful liquidations and loss of all funds.
Levered/Social Loss Risk
In the event of sharp price movements, traders with levered positions can lose more than their collateral value. In the event of the Insurance Fund not being sufficiently capitalized, these losses will be socialized across market participants.
Liquidation Risk
Blueberry offers both leveraged yield positions and borrow/lend. For leveraged yield positions, there is a risk of liquidation when a user's profit and losses are approaching the total collateral they have posted.
100% Utilization Risk
When an asset is fully utilized (100% of the supply is lent out), there will be no tokens left in the pool, which means withdrawals and borrows will fail for that asset. Users will have to wait until the utilization rate goes down, either through some users repaying their loans or depositing new funds before they can withdraw or borrow.
A user is more likely to be affected by this if their deposit represents a large share of the pool, or if the asset has extremely high borrow demand.
Last modified 2mo ago