Risk

Always under control

teeter's smart contracts automatically rebalance to prevent liquidation when the pool's leverage is much higher than expected, i.e., when prices are highly volatile. Each rebalance will return the current leverage multiple to the initial leverage multiple and liquidate the corresponding position(s). Simply put, this rebalancing mechanism greatly reduces the risk of the entire contract being liquidated.

It's important to note that although we have adopted a rebalancing mechanism to avoid liquidation, we still cannot avoid liquidation completely. In order to avoid mutual influence between tokens, we created an independent fund pool for each token for management. Impermanent loss can therefore occur for bonds issued by the senior tranche when a leveraged token trader loses all of their collateral and becomes bankrupt. This can occur for several reasons, but the root cause is likely that the trade was not liquidated at an acceptable price.