🔢Risks
Here are the risk warnings to investors for vDEX:
Smart Contract Risks: There is always a risk of vulnerabilities in smart contract code, despite attempts to mitigate these through testing, audits, and bug bounties.
Counterparty Risks: The VLP pool is the counterparty to traders. If traders make a profit, it comes from the value of the VLP pool.
Token Risks: Bridged tokens may depend on the security of the bridge, and pegged tokens have risks of depegging.
Trading Risks: vDEX is a decentralized exchange allowing trading without the need for a username or password. The platform uses an aggregate price feed which reduces the risk of liquidations from temporary wicks.
Pricing Risks: There is no price impact for trades on vDEX, so you can execute large trades exactly at the mark price. However, during times of high volatility, there will be a spread from the oracle price to the median price of reference exchanges.
Fees: The cost to open/close a position is 0.1% of the position size. If a swap is needed when opening or closing a position, the regular swap fee would apply, this fee is 0.2% to 0.8% of the collateral size.
Execution Fee: There are two transactions involved in opening/closing/editing a position. The cost of the second transaction is displayed in the confirmation box as the "Execution Fee". This network cost is paid to the blockchain network.
Stablecoin Pricing Risks: In case the price of a stablecoin depegs from 1 USD, opening and closing short positions during this time would incur a cost on the collateral based on a spread of 1 USD to the oracle price of the stablecoin.
Stop-Loss/Take-Profit Orders Risks: Orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to: The mark price which is an aggregate of exchange prices did not reach the specified price, the specified price was reached but not long enough for it to be executed, no keeper picked up the order for execution.
Supply Risks: The increase in circulating supply will vary depending on the number of tokens that get vested, and the amount of tokens used for marketing/partnerships.
Rebalancing Risks: The fees to mint VLP, burn VLP or to perform swaps will vary based on whether the action improves the balance of assets or reduces it.
Gas fee difference: Users might want to compare the cost in gas fees between a simple swap and adding/removing liquidity to/from an LP position
Please note that this is a non-exhaustive list of risks and investors should exercise caution when interacting with any smart contract or blockchain application.
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