Risks

Trading on leverage

Trading on leverage carries lots of risks. You can lose all your funds. Bear in mind that your position can be easily liquidated because of sudden price changes and funding rates going against you. Oracle prices are used for liquidations; oracles prices can often deviate from real market prices and make your position eligible for liquidations.

Underlying liquidity

Contango aggregates liquidity from the different money markets it integrates. As a result, traders are exposed to the liquidity of the market they chose to trade on: ETH/DAI on Aave on mainnet is likely to be highly liquid, whereas a more exotic asset like PTeETH/ETH on Silo on Arbitrum might not be as liquid. This aspect should be taken into account when opening and closing a position. Unexpected liquidity crunches are driven by market forces and as such cannot be foreseen nor controlled by Contango.

Displayed APY/ROE

Contango always shows the APY/ROE rates using the underlying protocol data coming from their smart contracts or official APIs. Contango indeed strives to show the most truthful and reliable data for any of its integrations. However, please note even official API sources might not necessarily reflect real on-chain yields: e.g. in the case of Ethena's sUSDe, we've chosen to compute the displayed bearing-yield in a different way (see this FAQ). Always DYOR and ask us questions on Discord.

Smart contract risk

Even if fully audited, smart contracts can be hacked and exploited anytime.

• Contango has never released unaudited code in production. Each integration with the underlying money markets has been audited one or more times, as well as the core contracts.

• The Contango team always conducts due diligence on both the contracts and the teams that it integrates, but this is not to be interpreted as a curation process for end users. Contango users should still carry out their own due diligence and assess risks related with each underlying market.

• Some contracts that only have view functions are unaudited because they are only used by the Contango UI to display rates and other metrics.

• Users funds sits in a different proxy per position. Each position is represented by an NFT, which sits in the user's wallet. Only Contango's main contract can interact with proxies and allow the owner of the NFT that is linked to the proxy to act on it. Having special permissions on the NFTs, on a theoretical exploit of the core contracts, user funds could be at risk since it would have permissions to effectively transfer the NFTs.

• Contango contracts are still upgradeable and under the Contango team control (see Multisig risk below).

• Also bear in mind that, when trading on Contango, you expose yourself to several layers of smart contracts risks. For instance, if you trade PTeETH/ETH on Contango via Silo, you exposure yourself to the following smart contract risks: Pendle, Silo, Contango. You also have exposure to Etherfi smart contract risk since you're trading eETH, just like if you were trading DAI you would be exposed to MakerDAO's risk.

Multisig risk

Please note that, at this stage, Contango is not yet a fully decentralized and immutable protocol. Core team members can upgrade the smart contracts via a 3 out of 5 multisig. However, the team is fully doxxed and supported by reputable investors and angels from the entire crypto space.