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Security and Risk
It's critically essential for DeFi users to understand the risks involved and why yield farming is considered a high-risk investment. Here we list some of the risks involved in yield farming.

Impermanent loss

When owning LP tokens, you might face impermanent loss. Impermanent loss happens when the price of your tokens changes compared to when you deposited them in the pool. The larger the change is, the bigger the loss. You can learn more about impermanent loss here: https://academy.binance.com/en/articles/impermanent-loss-explained

Smart contract risk

DeFi protocols use smart contracts to provide functionality on a blockchain. Unfortunately, the smart contracts of large protocols are complex and may be prone to hacks. To provide its functionality, Tulip Boquet has a set of smart contracts which interact with other third-party smart contracts (e.g., farms and decentralized exchanges). Any of these smart contracts may be vulnerable to hacks which could cause the loss of all your funds. We are in the process of mitigating this risk by auditing our smart contracts with a reputable auditor. However, the risk of a vulnerability being found exists on any DeFi protocol. Tulip Boquet is provided "as is." Use it at your own risk.
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Impermanent loss
Smart contract risk