Yamfore
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Risks

Protocol Risk

Similar to the use of any decentralised application on any blockchain. There exist some fundamental risks the end-user should be made aware of before interacting with the Yamfore protocol. The Yamfore protocol is an open-source collection of smart contracts operating independently on a blockchain. The distributed nature of the storage and operation of the protocol means no single individual, organisation or governing body owns or controls the protocol. Instead, the holders of the $CBLP token dictate the development / direction of the protocol.
The Yamfore protocol is provided on a โ€œUSE AT OWN RISKโ€ provision without any associated warranties or guarantees provided. No developer or entity involved in the creation or promotion of Yamfore is responsible for any damages / loss of funds resulting from the usage of the protocol. The Yamfore protocol will go through extensive internal testing as well as external auditing before launching, however the risk of an undiscovered bug or exploit residing in the protocols smart contracts always remains a possibility.

Financial Risk

Another risk pertains to the financial risk a user takes when initiating a loan through the protocol. This risk comes in the form of overexposure to the native utility & governance token of the protocol, $CBLP. The $CBLP token is inherently riskier than ADA due to its relatively limited use case and smaller market capitalization. Ideally any user taking out a crypto-backed loan against their ADA would prefer the majority if not all of their deposited collateral to remain denominated in ADA.
Although the borrowers $CBLP tokens are ALWAYS returned in full on closure of their loan position. The market value of a borrowers deposited $CBLP tokens may vary greatly from the start of their loan term to the end of it. The Yamfore protocol is only concerned with ensuring the value of the borrowers deposited ADA collateral is of sufficient value before allowing a borrower to close their loan position and redeem their $CBLP tokens. It is entirely possible for a borrower to close their loan position and be in profit on their deposited ADA collateral, whilst down / neutral in price on their deposited $CBLP collateral. This is a very similar concept / effect as impermanent loss, when providing liquidity to a decentralized exchange.
If a user deems the protocolโ€™s ADA/CBLPcollateral ratio requirement too high and wishes to retain the majority / all of their deposited collateral in ADA. The user might instead choose to use a more traditional crypto-backed lending platform / protocol. The user of course forgoes all the advantages a community backed lending protocol offers, such as no margin calls, no ongoing interest repayments, indefinite loan terms etc.

Wallet Risk

On initiation of a loan through Yamfore, a non-fungible token representing ownership of the loan is minted and sent to the borrower's wallet. This NFT deed is required to redeem the deposited collateral assets secured in the protocol. A borrower losing their NFT deed means forfeiting their deposited collateral assets. The user should always ideally store their NFT deed in a secure long term cold storage solution such as a hardware wallet or air-gapped device. This is highly recommended and only possible on community backed lending protocols since loan positions are completely passive, neither requiring constant interest repayments or active margin call risk management.
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Protocol Risk
Financial Risk
Wallet Risk