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Protocol and Bridge Risk

Protocol risk

Protocol risk involves various factors that contribute to the overall risk associated with the underlying blockchain protocol. The following metrics are commonly considered when assessing protocol risk:

1. Level of Audit

The level of audit refers to the extent of third-party audits conducted on the protocol's codebase. A higher level of audit indicates a more thorough evaluation of the protocol's security and reduces the likelihood of undiscovered vulnerabilities.

2. 3rd Party Risk (excluding oracle)

This factor evaluates the potential risks arising from third-party integrations or dependencies within the protocol, excluding oracle-related risks. Dependencies on external components may introduce additional vulnerabilities or counterparty risks.

3. Hack Record

The hack record assesses the historical incidents of successful hacks or security breaches associated with the protocol. A high hack record raises concerns about the protocol's security and reliability.

4. Open Source/Verified Code

The use of open-source code or verified code adds an additional layer of security to the protocol. Open-source code enables public scrutiny and peer review, reducing the risk of hidden vulnerabilities or backdoors.

5. Operation Age

Operation age refers to the length of time the protocol has been functioning and actively used. Protocols with a longer operational history often benefit from more extensive testing, bug fixes, and security enhancements, reducing the risk of unknown issues.

6. Admin Control Risk

Admin control risk evaluates the degree of centralized control or authority that the protocol's administrators possess. Higher admin control risk may introduce additional counterparty risk or vulnerability to manipulation.

7. Oracle Risk

Oracle risk assesses the vulnerabilities associated with oracles, which provide external data inputs to the protocol. The accuracy, reliability, and security of oracles are crucial for proper protocol functioning and decision-making.
It is important to note that the specific weightings and ratings assigned to each metric may vary depending on the protocol and its unique characteristics.

Bridge risk

It refers to the protocol risk associated with the bridge used in this Diamond.