Risk Disclaimer

DeFi carries real risks. Read this carefully before you supply, borrow, or move capital through Dynamo Finance.

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General DeFi Risk

Using any decentralized finance protocol carries the possibility of total loss of deposited assets. Smart contracts execute autonomously and cannot be reversed once a transaction is confirmed. There is no customer support line, no chargeback, and no insurance fund covering individual losses. Treat every deposit as capital you are prepared to lose entirely.

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Smart Contract Risk

Dynamo Finance is an interface to the Morpho Blue protocol. Both the interface and the underlying smart contracts may contain bugs, undiscovered vulnerabilities, or behave unexpectedly under conditions not seen during testing or audit. Past audits do not guarantee future safety. Critical exploits in DeFi protocols have historically caused total user loss within minutes.

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Oracle Risk

Markets price collateral using oracle price feeds. If an oracle is manipulated, delivers a stale price, or fails entirely, collateral may be valued incorrectly, leading to incorrect liquidations or under-liquidation of insolvent positions. Each Morpho market specifies its own oracle; verify the oracle address before supplying or borrowing. The Risk Dashboard surfaces oracle concentration but cannot detect feed corruption in real time.

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Liquidation Risk

Borrowers face liquidation when their Health Factor falls to 1.0 or below. Triggers include:

• A sudden decline in collateral asset price
• A spike in borrow rates increasing debt accrual
• An oracle price update

Liquidations are permissionless, any address may execute them once the Health Factor permits. The liquidation penalty is deducted from the borrower’s collateral. During extreme volatility or low liquidity, liquidation bots may not act quickly enough to prevent bad debt.

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Interest Rate Risk

Borrow rates on Dynamo are variable and determined by market utilization. At high utilization, rates can rise sharply and rapidly. A position that was cost-effective at low utilization may become significantly more expensive during periods of high demand, accelerating debt accrual and increasing liquidation risk.

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Market Risk

Collateral asset prices can decline faster than a position can be actively managed. Even with automated tools such as auto-repay, extreme price moves in illiquid markets may outpace the protocol’s ability to protect a position from liquidation or bad debt.

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Curator Risk

Vault curators are responsible for allocating deposited capital across Morpho markets. A curator may:

• Misallocate capital to markets with excessive risk parameters
• Become inactive or abandon a vault
• Act in ways that are detrimental to depositors

Depositors in vaults are exposed to the decisions of the curator in addition to the underlying market risks.

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Counterparty Risk

Dynamo Finance relies on third-party infrastructure providers including:

• Oracles — for accurate price feeds
• Keepers / liquidation bots — for timely liquidation execution
• RPC providers and indexers — for interface data accuracy

Failure or malicious behavior by any of these parties could negatively affect your positions or the accuracy of information displayed in the interface.

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Network Risk

Blockchain infrastructure introduces additional risks:

• Congestion — high gas fees may delay or price-out time-sensitive transactions (e.g., repayments before liquidation)
• Hard forks — protocol upgrades may introduce unexpected behavior
• L2 sequencer downtime — on Layer 2 networks, sequencer outages can prevent transaction submission entirely, leaving positions unmanageable during critical periods

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Stablecoin Risk

Stablecoins used as collateral or loan assets may lose their peg to the underlying asset. Historical depegging events have occurred with major stablecoins, causing incorrect collateral valuations, mass liquidations, and unrecoverable losses for affected users.

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Automation Risk

Dynamo Finance offers automation features. These features rely on smart contracts and bots that monitor on-chain conditions and submit transactions on your behalf.

• Bots may fail to trigger in time during extreme volatility
• Gas spikes may prevent timely execution
• Network congestion or sequencer downtime may delay automation

Do not rely solely on automation to protect your position. Monitor your Health Factor regularly.

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Governance Risk

DAO or multisig governance decisions can modify protocol parameters. Changes to these parameters may materially affect the risk profile of existing positions without prior notice. Governance processes are public; monitor active proposals if you have open positions.

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Regulatory Risk

Regulatory treatment of DeFi is unsettled and varies by jurisdiction. New rules may:

• Restrict your access to the Protocol
• Impose tax obligations on prior on-chain actions
• Render certain assets or activities non-compliant

You are solely responsible for understanding and complying with the laws applicable to you, including tax reporting on yield, liquidations, and asset transfers.

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Self-Custody Risk

Dynamo Finance is non-custodial: your wallet’s private key controls your assets at all times. The following can lead to total loss:

• Losing or exposing your private key or seed phrase
• Signing a malicious transaction or approving unlimited token allowances to malicious contracts
• Falling victim to phishing attacks

Verify every transaction before signing. Never share your seed phrase.

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Your Acknowledgement

By using the Dynamo Finance interface, you acknowledge that you have:

• Read and understood this Risk Disclaimer in full
• Accepted that you are using the Protocol entirely at your own risk
• Understood that Dynamo Finance cannot manage, custody, or insure your digital assets
• Understood that the Morpho smart contracts used by this Protocol are outside Dynamo Finance’s control

Nothing on the Dynamo Finance interface, including the Risk Dashboard, in-app tooltips, or these disclaimers, constitutes financial, investment, legal, or tax advice.