Yield farmers' risks

Risks

Like any borrowing with leverage, Alpha Homora V2 has its own risk. The below outlines the risks yield farmers may face on Alpha Homora V2.

For yield farmers/liquidity providers with no leverage (opening a position at 1x)

  • Users in this category are exposed to impermanent loss risk. See more about impermanent loss here.

    • Note that impermanent loss risk is minimal in a pool with all stablecoins (e.g. Curve 3pool that consists of USDT, USDC, and DAI)‌

For yield farmers/liquidity providers with leverage (opening a position with more than 1x)

  • Users in this category are exposed to impermanent loss risk. The impermanent loss risk is amplified by the leverage level that users enter at.

    • Note that impermanent loss risk is minimal in a pool with all stablecoins (e.g. Curve 3pool that consists of USDT, USDC, and DAI).

  • Additionally, because of the impermanent loss risk + the fact that users are taking on leverage, users' positions also have liquidation risk.

More details on how to manage/mitigate this risk: see here.

How Alpha Homora v2 mitigates risks for users: see here.