Risk Disclosure

Disclosure

Oracle Security

Current relies on Pyth for their price feeds.In the future, our proprietary oracle will be the main source of price data, while Pyth will be used as a secondary reference for validation.

EMA and Spot Price

In decentralized oracles, the Spot Price provides the immediate price from on-chain/off-chain matching markets. It updates fastest but is more susceptible to short-term volatility and manipulation. The EMA (Exponential Moving Average) applies exponentially decaying weights to recent prices to smooth noise and reduce outliers, at the cost of some lag. In Current, oracles combine both: use EMA as the primary valuation anchor (for collateral pricing, LTV calculations, and liquidation triggers) and use Spot Price as a fast signal (to detect sudden moves, monitor depegs/extreme volatility, and trigger safety switches).

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Assets Risk

At the token level, we believe each asset carries the following risks:

1. Oracle price risk Current has taken multiple measures to reduce oracle quotation risk, but it cannot guarantee 100% that the protocol will always accept a correct price or reject an incorrect one.

2. Smart contract risk Although tokens listed on Current undergo rigorous reviews, users should understand that any smart contract may be exploited, potentially leading to significant price volatility.

3. Depeg risk For stablecoins and LST assets, depegging events (e.g., UST’s depeg) are a major risk and can cause substantial losses to both users and the protocol.

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Market Risk

The core market risk for a lending protocol is whether liquidators can complete the liquidation arbitrage via flash loans or other means. If liquidators are unable to carry out this arbitrage, the platform may incur bad debt due to market risk. Current will monitor the following token metrics and use various proactive management measures (e.g., adjusting protocol parameters, performing ADL) to prevent this issue.

1. Token Volatility

Because loans are only liquidated once they hit the liquidation threshold, token volatility must be fully considered when setting the Liq LTV. Current uses Parkinson’s Volatility to measure this.

//
def parkinson_vol(high: np.ndarray, low: np.ndarray) -> float:
    """
    Parkinson's volatility (per your formula):
        sqrt( (1/N) * sum_i [ ln(Hi / Li) ]^2 )
    """
    high = np.asarray(high, dtype=float)
    low  = np.asarray(low, dtype=float)

    if high.shape != low.shape:
        raise ValueError("high and low must have the same shape")
    if np.any(low <= 0) or np.any(high <= 0):
        raise ValueError("prices must be positive")

    log_hl = np.log(high / low)
    return np.sqrt(np.mean(log_hl ** 2))

1. Token Liquidity

Monitoring a token’s liquidity is also a key factor in ensuring successful liquidations. We will track the following indicators to make sure the token has sufficient liquidity:

• Hourly trading volumes (accounting for wash trading)

• Immediate price impact of token swaps (across a range of USD-valued sizes)

• Price resilience post-token swap

1. Trading Volumes

Trading volume reflects market activity and how easy it is to buy and sell a token; it is a useful measure of token liquidity. High trading volume indicates:

• Substantial liquidity

• Narrower bid–ask spreads

• Reduced price slippage

• Continuous trading

We will monitor the above indicators to ensure users can trade with low slippage.

1. Price Impact Analysis

The potential price impact of liquidation is quantified using on-chain data, which is continuously fed into the model. By monitoring these indicators and executing ADL, we will ensure the protocol does not incur bad debt.

1. Market Capitalization

In principle, tokens with higher market capitalization tend to have better liquidity and lower risk. If the listed token has an locked portion outstanding, it will be accounted for with a weighting adjustment.

1. Relation to Other Tokens

When introducing a new asset to the protocol, we will fully consider its relationship with existing assets to ensure that the new asset’s price volatility does not significantly impact the assets already in the protocol.