Risks

GAMMA Risks Overview

We prioritize transparency and openness in everything we do. Our code is open-source, and you can review it at any time on GitHub. It's important to highlight the potential risks involved in using GAMMA, our dynamic Automated Market Maker (AMM). Below are the main risks users should be aware of when interacting with the GAMMA protocol.

1. Impermanent Loss (IL)

Impermanent loss is inherent to any AMM. In GAMMA, this risk is tied to how dynamic fees adjust based on market conditions. The risk occurs if:

  • The dynamic fee model fails to adjust properly, leading to potential losses that are greater than expected.

Mitigation

  • We’ve conducted extensive testing on our dynamic fee system to ensure it functions properly, and we continue to test under live mainnet conditions.

  • Fees are adjustable, allowing us to fine-tune the settings if issues arise during live operation.

2. Smart Contract Risk

All DeFi protocols, including GAMMA, rely on smart contracts. While we follow best practices, our smart contracts will be fully audited by external firms to reduce potential vulnerabilities and ensure the highest standards of security.

3. Liquidity and Volume Fluctuations

In some cases, high fees during low-volume periods may lead to reduced trading activity. This could lower the APY (Annual Percentage Yield) for liquidity providers (LPs). Conversely, higher fees during periods of higher volume could result in increased APY.

  • The dynamic fee system is designed to find an optimal balance between volume and fees. However, we anticipate a learning curve as the protocol operates on mainnet, and adjustments may be needed based on live data.

4. Low TVL (Total Value Locked)

Lower-than-expected TVL may lead to reduced trading volume, which can affect the overall APY for liquidity providers. This risk is tied to the platform's adoption and initial user base.

  • We are actively working with partners to ensure sufficient liquidity at launch and will be transparent about any changes to the protocol that may impact users.

Our Commitment to Transparency

We believe that transparency is key to building trust in DeFi. As part of that commitment, GAMMA is open-source and available for anyone to review on GitHub. We encourage users to explore the code, provide feedback, and stay informed about the development process.

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