GLIF Docs
V1 English
V1 English
  • 👋Welcome to GLIF
    • Intro
    • History of GLIF and Filecoin DeFi
  • Storage Provider Economics
    • Use Cases
    • Storage Provider Equity
    • Storage Provider Liquidation Value
    • Storage Provider Earnings
    • Borrowing Limits
    • Guarantors
    • Withdraw funds
    • Rates & Payments
    • Quotas
    • Rule Enforcement
  • Agents
    • Agents
    • Owner and Operator Keys
    • Credentials
    • Add/Remove Miners
    • 3 Agent States
    • Helpful CLI commands
  • Token holder economics
    • How it works
    • Understand Collateral
    • Rewards & iFIL
    • Exits
    • Audits
    • Risks
  • More about the protocol
    • Agent Police
    • Agent Data Oracle
    • Decentralization
Powered by GitBook
On this page
  1. Token holder economics

Risks

PreviousAuditsNextAgent Police

Last updated 1 year ago

It's important for any Filecoin token holder to understand the risks of using GLIF, and what we're doing to mitigate those risks:

  1. Smart contract risk - with any DeFi protocol, the risks of malicious hacks and/or sensitive bugs is a risk that must be considered. Time is the best test of a DeFi protocol, so this risk decreases as time passes. To mitigate smart contract risk, GLIF has undergone 3 professional audits.

  2. Financial math risks - In the previous section, we discussed - the % of FIL that will be recovered in a liquidation event. Another risk to consider is that our predicted recovery rates are over-estimated, meaning we believe we can recover a larger amount of FIL than we actually can if the scenario plays out in real life. We're doing a couple things to mitigate these risks:

    1. We're using conservative recovery rates (50%), which are both lower than the average recovery rate we noticed in our research (60%), and also lower than the presumed recovery rate that CeFi lenders have been relying on for the past couple of years (70%).

    2. We're reevaluating recovery rates as the Filecoin network's economics change. Recovery rates are not a static metric, and will change as the underlying network's economics change.

In general, we strongly encourage you to do your own research on lending/staking protocols, both CeFi and DeFi. There is no FIL rewards program that comes without risk, and any project or company that markets a risk free FIL rewards program should be treated with strong skepticism.

recovery rates