Risks and Terms & Conditions

Protocol and Interface risks every user must be aware of.

Fees

Silent Protocol charges 50Bps operation fee for depositing into the protocol, there are no withdrawal fees.

Security Risk

Silent protocol has taken extensive measures through multiple audits to secure its system from any 3rd party attack, but still it is a beta software, with risk of attacks from different dimension still existing and cannot be overcome without operating the contracts for multiple years on mainnet while mainatining a sizable TVL. No matter how many audits silent protocol or in genera any defi protocol has - risk of a hack or loss of funds still exists in new protocol like silent protocol. Depositing into Silent protocol and using its services doesn't make silent Protocol liable for any unfortunate unforeseen events where the protocol breaks down and cannot operate and provide its defined services to its users and there is a loss of user funds for misoperation, hacks but not limited to system misconfiguration. Silent Protocol will ALWAYS STRIVE to achieve swiss grade security when it comes to operating maintaining and managing its set of contracts however still users are cautioned with the fact that it is a new protocol and there can be complete or part loss of user funds. Upon depostiing into the protocol, you are agreeing anf acknowleding to the risks mentioned above and the fact that Silent Protocol will not be responsible for any such unfortunate events.

Protocol vs. Interface: Key Distinction

Silent Protocol operates as an on-chain protocol, distinct from its interface (application), which is managed by a Web2 company. While the company can restrict access to its interface, the protocol is designed to be governed by a DAO, not controlled by any single entity. Establishing a robust DAO foundation is critical for ongoing innovation and enhancing the Silent Protocol’s security. For more on our security efforts, see the Audits & Security section.

Companies operating interfaces have their own legal disclaimers and risks, which users must review and accept. For example, if the interface becomes inaccessible, it may hinder managing your position. However, you can still access your assets directly via the smart contracts or through alternative interfaces.

This section is dedicated to explaining risks related to Silent Protocol on the contract level and conceptually. We believe that outlining risks explicitly creates stronger accountability in the community and gives power back to the users of the protocol. The risks presented below are general across many DeFi protocols.

Protocol Technical Disclosure

Some of the disclosures can mimic interface-related concerns below.

Sandwich Attacks and MEV

No trader on Ethereum is immune to MEV (Miner Extractable Value) attacks, including users of the Silent Protocol. The DAO can collaborate with protocols offering MEV protection to mitigate this. While the protocol moves funds using battle-tested DEXs, there’s a risk of loss due to slippage. Protections are in place, but this remains an infrastructure-level concern.

Risks of Allowed Tokens/Contracts Lists

Silent Protocol specifies where funds can be deployed. If an allowed token or contract is compromised (e.g., wrong address or external hacks), it could lead to liquidity insolvency within the system.

Inability to Withdraw as an LP

If the entire pool is borrowed, liquidity providers (LPs) may be unable to withdraw capital at that moment—a standard scenario in protocols like Aave or Compound. DeFi protocols typically don’t enforce forced liquidation, which can cause insufficient liquidity for withdrawals. To mitigate this, the Silent Protocol uses an interest rate curve (where rates depend on pool utilization). If utilization remains high, Governance can adjust parameters to increase lending costs, encouraging borrowers to repay loans and free up liquidity.

Wallet and Transaction Signing Issues

User-side challenges, such as wallet connection or transaction signing errors, can impede interaction with the protocol and should be considered.

Hacks and Software Issues

Exploits, unintended malfunctions, or security breaches (e.g., hacks) can disrupt the protocol’s design, potentially leading to partial or complete loss of funds. Users must understand and accept this risk.

Interface Risks

Beta Stage Disclaimer

Silent Protocol's Ghost Layer App is in its beta stage, meaning the app, its smart contracts, and related software are experimental. The app is provided “as is” and “as available,” without warranties—express or implied—including guarantees of being free from defects, vulnerabilities, or infringement, or being merchantable or fit for a specific purpose.

Software Weaknesses

Despite efforts to meet high security standards, the Ghost Layer App and related software may contain weaknesses, bugs, vulnerabilities, or be susceptible to phishing, malware, or malicious attacks. Such issues could materially impact operations or lead to losses for users or third parties.

Blockchain Network Risks

The Silent Protocol App interacts with the Protocol on Ethereum Virtual Machine (EVM)-compatible blockchains. Malfunctions, breakdowns, or abandonment of these blockchains could adversely affect the app and protocol. Advances in cryptography (e.g., quantum computing) could also undermine the cryptographic mechanisms securing these blockchains. As an early-stage technology, smart contracts and blockchains remain unproven and vulnerable to attacks (e.g., 51% attacks, consensus splits, or chain reorganizations), which could result in complete loss of assets.

Protocol Interaction Risks

The Silent Protocol App interfaces with the Protocol, exposing users to risks inherent in the protocol’s experimental and complex nature. Users must fully understand the protocol’s mechanics and transaction consequences before interacting. The app automatically derives information from the protocol and underlying blockchains, which may not be verified, accurate, timely, or complete. Additionally, third-party functions within the protocol may fail or act unreliably, potentially causing partial or complete loss of assets.

Risk of Flawed Logic in the App

Flaws, defects, or impairments in Silent Protocol's App’s logic could cause smart contracts to operate incorrectly or execute transactions contrary to their intended logic, leading to partial or complete loss of assets.

Confusing User Interface

The Silent Protocol's App’s interface may include confusing or misleading elements, potentially causing users to execute unintended actions, transactions, or connect the wrong wallet, account, or network.

Legal and Regulatory Uncertainty

Just like any other business, the intended activities of the Silent Protocol may be subject to various laws and regulations in the countries where it operates or intends to operate. We might be obliged to obtain different licenses or other permissive documents in some or all jurisdictions where we plan to conduct our business. Therefore, our operations in such jurisdictions will always be subject to obtaining such licenses or permissive documents, if required by applicable laws. Furthermore, regulatory actions, orders, or inquiries may adversely affect the Silent Protocol App and the Silent Protocol, or impair our ability to make the Silent Protocol App available. Additionally, changes in applicable laws or regulations, or evolving interpretations of existing laws, could, under certain circumstances, result in increased compliance costs or capital expenditures, which might impact our ability to maintain our business model and continue developing the Silent Protocol App and its related software.

Risk of Theft

We make a commercially reasonable effort to ensure that all transactions carried out via the Silent Protocol App are secure. Notwithstanding the aforementioned, there is no assurance that there will be no theft of digital assets due to hacks, sophisticated cyber-attacks, distributed denial-of-service attacks, errors, double-spend attacks, flash-loan attacks, vulnerabilities, or defects in the Silent Protocol App, its related software, the Ethereum blockchain network, or any other blockchain network, or other potential issues. Such events may include, for example, flaws in programming or source code that lead to exploitation or abuse. Any of these incidents may result in the partial or complete theft or loss of digital assets used in transactions carried out through the Silent Protocol App or with the use of its related software.