Generally speaking, as IRON is collateralized by crypto assets deposited into IronLend, the IRON Stablecoin carries a similar risk factor to IronLend.
Below are a reiteration of those risks in the context of the IRON Stablecoin:
One of the greatest risks to the IRON Stablecoin as a whole is a bad actor who discovers a vulnerability in deployed smart contracts, and uses it to break the Protocol or steal from it.
The very worst-case scenario is that the assets collateralizing IronLend are stolen and recovery is impossible. In this case, IRON would be undercollateralized and likely lose its peg.
Audits and formal verifications are either completed or in progress at the time of writing. However, even with auditing or formal verification, the mathematical modeling of intended behaviors may be incorrect, or the assumptions behind the intended behavior itself may be incorrect, leading to unintended consequences of one part or the entire Iron Finance protocol.
A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.
For the Iron Finance Protocol, examples of a black swan event include:
An attack on the collateral types that back IRON.
A large, unexpected price decrease of one or more collateral types.
A highly coordinated Oracle attack.
A malicious Iron Finance Governance proposal.
Please note that this list of potential "black swans" is not exhaustive and not intended to capture the extent of such possibilities.
While no one solution is failsafe, the careful design of the Iron Finance Protocol (the IronLend Collateral Factor, Governance, Oracle Security, etc.) in conjunction with good governance (e.g., swift reaction in a crisis, thoughtful risk parameters, etc.) help to prevent or mitigate potentially severe consequences of an attack.
Oracle price feed problems or irrational market dynamics that cause variations in the price of IRON for an extended period of time can occur. If confidence in the system is lost, rate adjustments could reach extreme levels and still not bring enough liquidity and stability to the market.
The Iron Finance Protocol is a complex decentralized system. As a result of its complexity, there is a risk that inexperienced cryptocurrency users will abandon the Protocol in favor of systems that may be easier to use and understand.
While IRON is easy to generate and use, newcomers might find the Protocol difficult to understand and navigate. Although IRON is designed in such a way that users need not comprehend the underlying mechanics of the IRON Stablecoin Protocol in order to benefit from it, the documentation and numerous resources consistently provided by the Iron Finance community help to ensure onboarding is as uncomplicated as possible.
Once it launches, should the Iron Finance DAO fail to adequately maintain itself, or make decisions against its own best interest, the future health of the Iron Finance Protocol could be at risk.
ICE holders are incentivized lock ICE into blueICE in order to receive a by-the-block dividend of fees collected by the Iron Finance Ecosystem and participate in the protocol's governance, driving their own wealth and future. Successful management of the system should result in sufficient funds for governance to allocate to the continued maintenance and improvement of the Iron Finance Protocol.
Users of the Iron Finance Protocol (including but not limited to IRON Stablecoin, IronSwap, IronLend, and Governance Staking) understand and accept that the software, technology, and technical concepts and theories applicable to the Iron Finance Protocol are still unproven and there is no warranty that the technology will be uninterrupted or error-free. There is an inherent risk that the technology could contain weaknesses, vulnerabilities, or bugs causing, among other things, the complete failure of the Iron Finance Protocol and/or its component parts.
Iron Finance smart contracts are in the process of being audited. Please read more in the Audits page.
Sometimes, following an audit, there may be updates to a smart contract. These changes will be thoroughly documented, but in the interest of risk disclosure, be aware of the audit date compared to the last time a contract was updated.