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Safeguards

Risk analytics and security

How LIQUMO estimates the risk of every pool, and how custody and permissions stay with you.

1

Non-custodial by design

Funds move directly from your wallet to the protocol contracts you approve. The audit status of each protocol is shown in the catalogue.

2

Expected loss limits for strategies

A strategy admits a pool only when its expected loss per year and its probability of losing more than 1% of the deposit are within the strategy limits.

3

Direct execution in protocol contracts

Smart Deposit executes only in protocols that have passed the LIQUMO risk check. The catalogue shows each pool’s audit status and the “Direct deposit available” mark.

Expected loss model for strategies

Smart Deposit strategies select pools with a model that estimates the expected loss of a deposit over a year: for each source of loss, the probability of an event within a year multiplied by the share of the deposit lost in such an event, summed over all sources.

Sources of loss: protocol exploit, estimated from the history of protocol incidents by protocol size, audits, past incidents and category; stablecoin loss of peg, from the price history of each stablecoin or of stablecoins with the same mechanism and size; issuer failure, for managed and off-chain products; impermanent loss, from the price volatility of the pool tokens over the last 180 days. For a stablecoin, only the larger of loss of peg and issuer failure is counted.

A pool enters a strategy only when both estimates are within the limits of that strategy, and the limits are never relaxed. Within the limits, a strategy prefers pools with a higher yield after expected loss. A pool with incomplete data is not admitted.

Conservative

Expected loss per year, at most1%
Probability of losing more than 1%, at most15%

Moderate

Expected loss per year, at most2%
Probability of losing more than 1%, at most25%

Every constant of the model and its data source is published in the methodology of the LIQUMO API. The estimates are statistical and are not a guarantee against loss.

Pool risk score

The score from 0 to 10 shown in the catalogue and on each pool page. It compares pools by eleven factors; strategies select pools by the expected loss model above.

Scale from 0 (lowest risk) to 10 (highest risk).

The final score is the highest of three values.

  1. Weighted sum of factors
  2. 60% of the weakest key factor
  3. Floor set by critical flags

Protocol and code

Incident historyWeight 14% · Key factor
AuditsWeight 10%
Track recordWeight 8%

Liquidity and withdrawal

Liquidity depthWeight 14% · Key factor
TVL trendWeight 4%

Yield

Dependence on emissionsWeight 8%
Yield stabilityWeight 8%
Yield versus marketWeight 10%

Asset and collateral

Underlying assetWeight 14% · Key factor
Impermanent lossWeight 5% · Key factor

Network

NetworkWeight 5%

Critical flags

  • The protocol is flagged as a rug pull.
  • The protocol or vault has been deprecated.
  • Material incident within the last 180 days.
  • A stablecoin in the pool trades more than 2% below its peg.
  • Protocol TVL fell by 25% or more over 7 days.
  • The current APY is a statistical outlier or exceeds three times its 30-day average.
  • The protocol’s data history is shorter than 90 days.
  • No audit declared and no reports published.

Levels: low risk up to 2.5, medium up to 4.5, high up to 6.0, very high above 6.0.

Cross-chain transfers and protocol alerts

Transfers via Circle CCTP

USDC, EURC and cirBTC move between networks by burning on the source network and minting on the destination. Circle confirms each transfer; LIQUMO does not hold funds in transit.

What you sign

A Smart Deposit is a short sequence of standard transactions from your own wallet. Your wallet shows each of them before you sign.

  1. 1Approval for exactly the amount deposited, and only if the current allowance is lower.
  2. 2Deposit straight into the protocol’s pool or vault, with your wallet as the owner of the position. No LIQUMO contract sits in between.
  3. 3Transfer of the 0.25% LIQUMO service fee to the LIQUMO fee address.
  4. 4Wallets that support batched calls (EIP-5792) confirm everything with one signature, atomically: if the deposit fails, no fee is charged. Other wallets sign step by step, with the fee as the last step.