By using Tarot, you confirm that you are not a resident of the US or any OFAC sanctioned country or territory.
Tarot is an experimental protocol. As with any DeFi protocol, you should only risk what you can afford to lose. You can lose up to 100% of your deposited tokens.
Please ensure you understand these risks before continuing. By using Tarot, you acknowledge you are eligible to use Tarot and take responsibility for the risks involved.
These risks include, among others: inability to access or use the Tarot interface provided at www.tarot.to; delays in deposits, withdrawals, or other transaction errors resulting from the interface and/or the Fantom network being unresponsive or offline; an incorrect display of information on the interface resulting from server or third-party API errors; errors or omissions in, or loss or damage incurred from the use of, any information displayed on the interface.
All information displayed on the interface is for informational purposes only. You should not take, or refrain from taking, any action based on any information displayed on the interface.
When you deposit your LP tokens as collateral to take out a loan or enter into a leverage yield farming position, your collateral is always at-risk and may even be liquidated when certain conditions are met.
Yield for LP positions comes from multiple sources: DEX trading fees (automatically reflected in an increasing value of LP tokens), vault rewards (if any, periodically compounded and reflected in an increasing quantity of LP tokens), and TAROT farming rewards (if any, manually claimable in the Farm tab) are all factored into the estimated APR. Trading fees are calculated based on historical DEX trading volume over the past 24 hours, and actual trading fees may differ from historical trading fees, particularly after periods of elevated trading volume. Vault rewards and farming rewards are calculated based on their current rates.
For leveraged yield farming positions in Tarot, borrow fees are also factored into the estimated APR. Borrow fees are calculated based on their current rates. It is possible for any lending pool to have a negative APR at a given amount of leverage, if the borrow fees outweigh the yield for the LP position. The risk of impermanent loss is also amplified with leveraged yield farming, and liquidation is always possible with borrowing or leveraged positions in Tarot.
Before taking out a loan, Tarot shows an estimate of the liquidation price range. Higher leverage implies a smaller range, and a leveraged position becomes liquidatable when the relative price for the token pair moves outside of this range. When this happens, your collateral may be liquidated in order to repay the loan, plus a liquidation incentive on the borrowed amount.
Liquidation prices are not fixed and may change as your borrowing costs increase. Prices are calculated using the time-weighted average price (TWAP) for the token pair from the Tarot Price Oracle.
Supplying liquidity on Tarot is a way to earn interest on tokens without the risk of impermanent loss. However, it is not risk-free.
As a lender, you may be temporarily unable to withdraw your tokens. This can happen if the utilization of tokens in the lending pool is high and there is not enough liquidity in the lending pool for the supplied token. Lenders may not be able to withdraw some or all of their tokens at a given time. Tarot uses a dynamic interest rate model to reduce the likelihood of this occurring for a prolonged period.
Lenders rely on liquidators to repay liquidatable loans and ensure the stability of the protocol. However, this may not happen in time and a loan may end up undercollateralized, implying a loss to lenders. Tarot uses a combination of model parameters and incentives to reduce the likelihood of undercollateralized loans occurring.
Low Liquidity and Malicious Pairs
Tarot is a permissionless protocol. Anyone can create a lending pool for a token pair, and some pairs necessarily involve more risk than others. A lending pool may even be created with a malicious token pair. You should always check to make sure you are interacting with the correct lending pool and token pair addresses on Tarot.
Pairs with low liquidity on the DEX can be risky for borrowers and lenders. In particular, the Tarot Price Oracle relies on a time-weighted average price (TWAP), so if a pair is inactive for a period of time, the TWAP may differ substantially from the current market price. Liquidators also may not be active for pairs with low liquidity, which can result in a possible loss for lenders.