# 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](https://docs.krystal.app/products/shared-vault/start-a-vault#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](https://docs.krystal.app/products/shared-vault/publish-vault#enforcement-rules)
* **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)**.