⚠️Risks

In order to discuss the risks of using Contango it’s worth recapping some key features of the protocol:

• Contango prices perps via spot and money markets, so it’s reliant on the liquidity of these markets (Uniswap, Aave, etc.). The long-term vision is to aggregate as many markets as possible to offer the best liquidity — read: price — for perps in DeFi.

• Contango doesn’t have an order book, nor liquidity pools, which means there’s no liquidity held on the protocol (no TVL).

• Liquidations are not carried out on Contango, but on the underlying money markets.

So, when using Contango, a trader should bear in mind the following risks:

• Market risk, i.e. sudden movements in price that can result in potential liquidations.

• Interest rate risk, i.e. sudden movements in the rates that can result in potential liquidations.

• Multiple smart contract risk, i.e. Contango’s, plus any underlying money market (Aave, etc.). Contango has already been fully audited by ABDK.