Risk Mitigation

Although Equilibria has taken a multitude of safety precautions and the protocols have been audited, participating in DeFi comes with certain risks.

Below are some potential risks and how Equilibria try to mitigate those risks. Please be aware that the list is not exhaustive and more vulnerabilities may be present no matter the efforts made to counter them.

Potential Risks on Pendle Finance:

Risk:

• As mentioned multiple times, although all the teams are aware of the importance of security and take actions towards keeping the protocols as safe as possible, issues may still exist, even on Pendle Finance.

Mitigation:

• Equilibria has an emergency function which is controlled by a multi-sig address. The function is designed to stop all the features of the protocol and try to withdraw the assets from Pendle in an emergency situation.

Price Volatility of ePENDLE

Risk:

• After PENDLE is converted on Equilibria, there are two ways to deal with the ePENDLE token received. Stake to earn more and swap back to PENDLE on a DEX. Under normal, rational market conditions, the ePENDLE will trade at a little bit higher price than PENDLE because ePENDLE allows users to you to earn more. However, extreme situations may arise, leading to a de-peg of PENDLE/ePENDLE. The ePENDLE price may then be much lower or higher than PENDLE.

Mitigation:

• Equilibria believes the market will finally find the right price, so Equilibria will educate users about the PENDLE/ePENDLE and encourage arbitrage between PENDLE/ePENDLE.

Smart Contract

Risk:

• While Equilibria smart contracts have been audited by 3rd party firms, they could theoretically have vulnerabilities.

Mitigation:

• Having smart contracts audited by multiple professional 3rd party firms decreases vulnerabilities.

• A bug bounty program will provide incentives for people to look for vulnerabilities in the Equilibria live code to filter out any remaining issues.