❗Risks
Rho Protocol is committed to transparency regarding potential risks. While we continuously strive to ensure the reliability and security of our platform, users should be aware of the following risks.
Last updated
Rho Protocol is committed to transparency regarding potential risks. While we continuously strive to ensure the reliability and security of our platform, users should be aware of the following risks.
Last updated
SMART CONTRACT RISK
Rho Protocol is governed by smart contracts. These contracts handle functions such as order matching, position management and risk monitoring. Although our contracts undergo rigorous testing and external audits, no code is guaranteed to be entirely free from vulnerabilities. Any unexpected exploit could result in partial or total loss of user funds.
Audited by third-party security firms []
MARKET RISK
Trading on Rho involves exposure to fluctuations in crypto rates and overall market volatility. Sudden changes in futures markets can affect open positions, leading to potential gains or losses. The protocol cannot guarantee protection against rapid market movements, and users should carefully monitor conditions that may impact their positions.
LIQUIDITY RISK
Liquidity on Rho may vary over time and depends on various factors, including user participation and overall market conditions. In low-liquidity environments, traders could face slippage or difficulty closing positions at desired prices. Rho strives to maintain optimal liquidity levels, but sudden market events or shifts in user demand can limit available liquidity.
EXTERNAL DATA FEED
Rho retrieves funding rate data from selected external sources, including exchanges like Binance, OKX, Bybit and indices providers like Coindesk Indices. These feeds are embedded in the calculations of the underlying floating rates for Rho futures. In the event that a data feed is delayed or inaccurate, displayed rates might be unreliable and could temporarily influence user decisions. However, these discrepancies do not directly trigger liquidations or other automatic protocol functions.
ARBITRUM & LAYER-2 RISKS
Rho is built on Arbitrum, a Layer-2 scaling solution for Ethereum. Arbitrum, despite being a battle-tested Ethereum Layer 2, relies on a partially centralized Sequencer for transaction ordering and a Security Council multisig for upgrades and emergencies. Its security depends on fraud-proofs and these components, distinct from Ethereum's fully decentralized model.
Any issue with Arbitrum’s infrastructure—such as network congestion, downtime, or upgrade-related bugs—could affect the availability or performance of Rho Protocol. We closely work with Arbitrum and perform recurring network checks.
Users are responsible for safeguarding their wallet credentials (private keys, seed phrases) and maintaining secure practices. Engaging in leverage or other advanced strategies can magnify losses as well as gains. Always conduct thorough research to understand the mechanics of interest rate trading before committing capital.
By using Rho Protocol, users acknowledge and accept the inherent risks outlined above. We remain dedicated to minimizing these risks through continuous improvement, security audits, and transparent communication. However, no system is entirely without risk. Please trade responsibly and only invest what you can afford to lose.