Position Risks

This page explains the remaining risks clearly and how the protocol manages them.

What Is Not a Risk

To be explicit, Locked Yield positions are not exposed to:

• Variable interest rate swings

• Lending pool utilization spikes

• Sudden changes in market APRs

Once your rate is locked, it stays locked.

Collateral & Liquidation Risk

Locked Yield positions are still collateralized positions.

If the value of your collateral falls far enough, liquidation can occur—just like in any lending system.

What’s different:

• Health factors are calculated portfolio-wide

• Interest rate exposure is already hedged

• Risk is measured on sensitivity, not raw notional

• Profound alert system via TG-bot that controls position risk levels and can propose optimized solutions

This makes liquidation risk more stable and predictable than in variable-rate systems.

Liquidity & Execution Risk

When positions are opened:

• The protocol selects the best execution path automatically according to rules in Best Execution

• Direct matching is preferred

• Synthetic structures are used when needed

In extreme conditions, execution quality may vary, but the protocol always prioritizes:

• Rate certainty

• Capital preservation

• Continuous solvency

Protocol & Smart Contract Risk

As with all on-chain systems:

• Smart contract risk exists

• External protocol dependencies may introduce risk

• Extreme market events can stress assumptions

XCCY mitigates this through:

• Conservative risk limits

• Choosing only well-trusted OG platforms

• Internal hedging

• Tranche-based liquidity backstops

• Algorithms and rules of Best Execution mechanism