Risks

It is also important to highlight that DeFi is risky.

There are layers of risk associated with DeFi products that interface/utilize other third party DeFi protocols. The Emplifai is no exception to this.

The risks that are present in the Emplifai are:

• Marhaba Smart Contract exploits/bugs etc

• Exploits in the Smart Contracts of Third-Party Protocols we will be interfacing.

• Systemic Risk (stable coin de-pegs and other Black Swan events such as a regulatory crackdown on DeFi)

• Impermanent Loss (Mitigated for pegged pools like USDC/USDT or WBTC/renBTC)

The way we will try to mitigate each of the risk is by doing the following:

• Audits, internal tests, bug bounties. (please see Strategy/protocol Due Diligence section)

• Screening process to assess the third-party protocols smart contracts and security to assess level of risk present with each strategy and third-party protocol integration. Risk score will be between 0 and 10, whereby 0 is highly risky and 10 is relatively low risk.

• A questionnaire that will act as a self-assessment of DeFi knowledge for each user before they proceed to interact with any vaults.

As we are a Shariah compliant service, we are unable to engage in insurance that would also mitigate some of these risks. Mitigating these risks any further within the current design of V1 would require more architectural modifications and a higher level of fund management activity and interaction. This may require further fees to be passed onto users to sustain any such efforts. As we progress with upgrades of V1, we hope to develop an architecture and modus operandi that is more suited to manage these risks.