> For the complete documentation index, see [llms.txt](https://docs.krystal.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.krystal.app/products/vaults/risks.md). # 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. *** ## Understand the Risk #### **๐ŸŒ€ Impermanent Loss** Although Vaults use a [Principal Token](/products/vaults/community-vault-v2/start-a-vault.md#principal-token) to simplify the farming experience, they ultimately hold **active Liquidity Positions**. This means **impermanent loss** โ€” the potential reduction in value when token prices diverge โ€” still applies. #### ๐Ÿ” Public Vaults: Understand Before You Join Public Vaults let users invest passively by depositing Principal Tokens into someone elseโ€™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 โ€” 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**. #### โœ… What Can You Do? * **Review Vault parameters carefully** โ€” Understand the token pairs, [strategy configurations, and allowable actions](broken://pages/XVdyPfMQ5w4nyPe8Ltxz#enforcement-rules) * **Start small** โ€” Begin with a modest deposit if you're unfamiliar with the Vault strategy * **Track Vault activity** โ€” Monitor ongoing performance of the vault * **Evaluate the Vault Owner** โ€” 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.
*** 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 โ€” always **"Do Your Own Research" (DYOR)**. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.krystal.app/products/vaults/risks.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.