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What are the risks?

You can find MetaMask’s risk disclosures here.

There are a few risks lending with MetaMask Earn:

  • Technical risk: the underlying smart contract could be hacked
  • Liquidity risk: the amount of tokens in the lending pool could impact the amount you can withdraw

We recommend users do their own research before participating in any defi protocol. MetaMask does not take any responsibility for fund loss due to using defi protocols. For more information, check MetaMask terms of service here.

Risks​

Liquidity levels

Withdrawing your loaned tokens is dependent upon the amount of liquidity available in the lending pool. If the liquidity is lower than the amount you want to withdraw, your withdrawal may be delayed. In practice, lending protocols solve this problem through the APR dynamic: when a token liquidity is low, the borrowing APR is high, which encourages borrowers to pay back their loan, and the lending APR is high, which encourages more users to lend their tokens.

De-pegging

Because stablecoins are backed by reserves of other currency, there is a risk of de-pegging. De-pegging can occur when the stablecoin’s value deviates from its backed currency due to market conditions or other factors.

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