Kamino Docs
Risk
Risk
  • Kamino Lend
  • Risk Dashboard
  • Oracles
    • LST Oracles
  • Risk Assessment Framework
  • Liquidity Risk
    • Introduction
    • Interest Rates
  • Insolvency Risk
    • Introduction
    • Asset Risk Framework
      • Oracle Pricing
      • Smart Contract Risk
      • Depeg Risk
      • Counterparty Risk
    • Market Risk
      • Token Volatility
      • Token Liquidity
      • Trading Volumes
      • Price Impact Analysis
      • Price Resilience Analysis
      • Market Capitalization
      • Relation to Other Tokens
  • Protocol Mechanisms
    • Automated Deleverage
    • Daily Caps
    • E-Mode Caps
  • Insurance Fund
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  1. Insolvency Risk
  2. Asset Risk Framework

Smart Contract Risk

When a token’s issuance is the result of a smart contract, this smart contract risk is evaluated by looking at the proven resilience of the smart contract, accepting only those audited rigorously by reputable firms, open source, immutable or multisig and battle tested long enough.

While these factors can reduce risk, they can't eliminate it entirely, making user vigilance and additional measures like bug bounties crucial. The maturity and reliability of a smart contract can be gauged by its usage, community support, and transaction history. Given that smart contract hacks have led to billions in lost funds, tokens with high smart contract risk can be onboarded only with stringent risk mitigation strategies, such as supply caps and/or isolation modes.

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