Risk disclosure

RISK DISCLOSURE

Market Volatility: The cryptocurrency market is highly volatile. Prices can surge or drop dramatically within a short period, influenced by factors such as regulatory developments, market sentiment, or technological advancements. This volatility can significantly impact the value of the assets you are using on Root Finance, potentially resulting in substantial gains or losses.

Asset Value Fluctuations: Cryptocurrencies and tokens in the DeFi space, including those on platforms like Root Finance, can experience rapid and significant value changes. Unlike traditional financial assets, which typically exhibit relatively stable price movements, crypto assets can fluctuate wildly due to the nascent and speculative nature of the market.

Potential Capital Loss: Utilizing DeFi platforms like Root Finance involves the risk of capital loss. Given the unpredictability of market movements and asset values, there is always a possibility that the value of your assets could decrease, potentially significantly. This risk is amplified by the fact that DeFi remains an emerging field with evolving technologies and regulatory frameworks.

Affordability of Participation: A key principle in using high-risk environments like DeFi is to only engage with funds that you can afford to lose. This approach helps mitigate the impact of worst-case scenarios, where asset values may sharply decline. Allocating only a portion of your resources that you are comfortable losing can safeguard your overall financial health.

Regular Monitoring and Health Factor: When using DeFi platforms, active monitoring of your positions is crucial. On Root Finance, maintaining a health factor above 1 is essential. The health factor is a metric that assesses the safety of your deposited assets relative to your borrowed amounts. If this factor falls below 1, liquidation could be triggered. In such an event, your collateral may be sold off to repay borrowed funds, often at a disadvantageous price. Regular monitoring allows you to swiftly react to market changes and adjust your positions to avoid such scenarios.

Understanding Liquidation Risks: Liquidation occurs when the value of your collateral no longer covers the amount borrowed due to market fluctuations. It is important to understand the mechanics of this process and the conditions under which it can happen. Proactively managing your positions and maintaining a healthy factor can help minimize the risk of unexpected liquidations.

Root Finance operates as a decentralized, open-source lending and borrowing platform within the volatile cryptocurrency market. As such, Root Finance assumes no responsibility for potential capital losses or code-related bugs that users may encounter. Users are reminded that engaging with DeFi platforms like Root Finance involves risks, including, but not limited to, rapid price fluctuations and technical vulnerabilities that could significantly affect asset values. All users should review the Terms of Use before participating, as their engagement is at their own risk. Root Finance does not offer compensation for losses resulting from these inherent risks.