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Risks

Intrinsic as a decentralized exchange provides users with the ability to trade a wide variety of tokens in a trustless and permissionless manner. However, using Intrinisc comes with several inherent risk that users should be aware of. These are broadly categorized below as smart contract risks, liquidity risks, market risks, and governance risks. The risks described below do not comprise of all risks in using a decentralized financial application and we encourage you to also do your own research.

Smart Contract risk​

Intrinsic like all decentralized finance protocols, relies on smart contracts. These contracts can contain bugs or vulnerabilities that malicious actors can exploit. To mitigate these risks, Intrinsic based its code and implementation on UniswapV3 contracts which have undergone security audits to help ensure their safety and security. See the Security Audit page for more info.

Intrinsic will also offer Bug Bounty programs to help find any open vulnerabilities. More details will be announced upon the launch of the Bug Bounty program.

Liquidity risk​

Liquidity providers (LPs) face the risk of impermanent loss or unrealized losses. This occurs when the price of tokens in a liquidity pool changes compared to when they were deposited, leading to potential losses compared to simply holding the token.

Note, that the impermanent losses are only realized if the LP withdraws its liquidity when its liquidity pool has a calculated impermanent loss in effect or prices have moved unfavorably for the LP. As trades continue on the liquidity pool that balances the pool back to its original state when the LP created the pool the impermanent loss decreases or disappears. Furthermore, LPs earn fees on each trade conducted against their liquidity pool. This opportunity to earn fees can offset the risks of impermanent loss and further incentivize the LP to keep their assets in the pool allowing more time for future trades to balance out the pool and reduce or remove impermanent loss.

Market risk​

Some assets in Intrinsic may have low liquidity and market depth and thus be more prone to price manipulation by traders with larger pools of capital to deploy.

Intrinsic will display the price impact of their trades on the interface, enabling users to make better trading decisions.

Governance risk​

Intrinsic is governed by its community through the INT token. This opens the door of possibility that Governance decisions may not always align with the interests of all users, potentially leading to contentious changes.

Proper INT token distribution is paramount and best served if allocated to those most vested in the success of Intrinsic - its users. This is why a majority of the INT tokens are allocated for the Community, such as early adopters and Liquidity providers among others. See thetoken distribution page for more info.

The governance process involves community discussion and feedback to ensure a broad range of perspectives are considered before implementing changes and that all meaningful steps of a governance proposal will be transparent. More details will be provided before Governance launches for Intrinsic.