The risks mentioned below are likely to be encountered when participating in any DeFi/LSDFi protocol. These risks are not unique to STFIL.
Potential Risks to Storage Provider
High Borrowing Interest Rate
Risk: This is a scenario where the utilization rate of pool reaches high level.
The protocol provides interest rate protection, which has already mitigated interest rate fluctuations, but you still need to closely monitor changes in interest rates.
Develop an appropriate repayment plan, for example, when the APY (Annual Percentage Yield) increases.
Establish an appropriate stable interest rate loan ratio to combat interest rate fluctuations.
When the utilization rate of the pool is high, the supply APY will be relatively high, which will attract more users to stake, thus reducing the utilization rate of the pool.
Exercise cautions when borowing FIL if the pool's utilization is high.
Smart Contract Risks
Risk: Although third-party firms have conducted audits on our smart contracts, it is still possible for them to contain vulnerabilities in theory.
Having smart contracts audited by multiple professional third-party firms decreases the chance of vulnerabilities.
We also run a bug bounty program to provide incentives for people to look for vulnerabilities in our live code as an extra layer to filter out any potential issues.
While we do our best to eliminate all possible risks, the DeFi industry is inherently unpredictable and can experience unforeseen events (known as "black swans"). We strongly advise against investing your life savings or risk assets you can’t afford to lose. Try to be as careful with your funds as we are with our code. 😊