Vault: Risk Evaluation

Krystal Vault is designed to make Liquidity Farming smarter, more efficient, and user-friendly. While we prioritize security at every level, it's important to understand that Vaults still carry inherent risks.

We strongly encourage users to understand how a Vault operates and to review the configurations carefully.

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Understand the Risk

🌀 Impermanent Loss

Although Vaults use a Principal Token to simplify the farming experience, they ultimately hold active Liquidity Positions. This means impermanent loss — the potential reduction in value when token prices diverge — still applies.

🔍 Public Vaults: Understand Before You Join

Public Vaults let users invest passively by depositing Principal Tokens into someone else’s Vault. While Krystal provides on-chain enforced configurations (e.g. token pairs, liquidity ranges, pool sizes), we cannot guarantee the Vault's performance or strategy outcome.

Vault Owners retain full operational control within their configured parameters. For example, a Vault Owner might open a USDC-$X position to boost liquidity before selling their own $X elsewhere — a legitimate action that may not align with your expectations.

Krystal ensures Vault Owners cannot directly withdraw user funds and must operate within pre-defined rules. However, as long as actions stay within these limits, Krystal cannot block potentially misaligned strategies.

✅ What Can You Do?

• Review Vault parameters carefully — Understand the token pairs, strategy configurations, and allowable actions

• Start small — Begin with a modest deposit if you're unfamiliar with the Vault strategy

• Track Vault activity — Monitor ongoing performance of the vault

• Evaluate the Vault Owner — Review their history, transparency, and performance; Krystal also displays their X account, so it's recommended to join well-known owners.

Risk Evaluation

For convenience, Krystal provides a Risk Evaluation mechanism. The detailed risk factors and the evaluation logic can be found in the following doc. The Risk Score should be used for reference only; always DYOR.

https://docs.google.com/spreadsheets/d/1sq2DCJg1nZFpzXNcpcOkJslL69w6T4INQyo8_sGnWfo/edit?gid=0#gid=0

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At Krystal, we are committed to building a safe and intelligent DeFi experience. Still, as with any crypto investment, it is essential to remain informed and cautious — always "Do Your Own Research" (DYOR).