Risk & Security
Dawn Vault is an experimental DeFi product. All deposits are subject to risk.
Repository Scope
This repository is the off-chain operator stack for Dawn Vault. It includes the strategy bot, monitoring dashboard, AI support services, and backtest tooling.
It does not include the on-chain vault program, PDA custody implementation, deployed program addresses, or multisig governance configuration. As a result:
this repo can verify operator-side controls, not on-chain custody guarantees by itself
any on-chain security claim requires separate deployed-program documentation or audit evidence
"open source" for this repo should not be read as proof that every production component is published here
Smart Contract Security
Non-Custodial Design
The intended product architecture is non-custodial, with vault assets held in Program Derived Accounts (PDAs) controlled by the on-chain vault program rather than by an individual operator.
However, the on-chain custody code and deployed addresses are not part of this repository, so that statement must be validated from separate on-chain documentation and audits.
Permission Separation
Admin
Add/remove adapters, change fees, replace manager, calibrate HWM
Multisig (Squads)
Manager
Execute rebalances, harvest fees, manage positions via adapters
Manager Bot
The Manager Bot cannot add new adapters, change fee parameters, withdraw to arbitrary addresses, or bypass adapter whitelisting.
This repository only demonstrates the off-chain manager side. It does not by itself prove the deployed on-chain permission model.
Adapter Whitelisting
External protocol interactions are gated through Adapter Programs. Only whitelisted adapters can access vault funds, and adding a new adapter requires Admin (multisig) approval.
Voltr Framework
Built on Voltr (Ranger Finance) — battle-tested with multiple vaults in production. Includes LP token accounting, fee management, HWM tracking, and locked profit mechanism.
Anti-MEV Protections
Locked Profit: Yearn V2-style linear release prevents sandwich/frontrun attacks
Redemption Fee: 0.1% makes sandwich attacks unprofitable
Priority Fee Management: Critical transactions use elevated priority fees
Audit Status
The off-chain operator stack in this repository is open source on GitHub
Kamino has public third-party audits
Any audit claim for the separate on-chain vault / custody layer must reference the actual deployed program and its audit reports
A dedicated third-party audit for the full product stack remains planned
Risk Disclosures
1. Smart Contract Risk — Medium
Vault interacts with multiple on-chain programs (Voltr, Kamino adapters, Jupiter adapters). Any could contain bugs or vulnerabilities.
Mitigations: Audited frameworks, adapter whitelisting, non-custodial PDA architecture.
2. Multiply / Leverage Risk — Medium
Kamino Multiply uses leveraged stablecoin loops (2.5x-5.75x). Collateral depeg, borrow rate spikes, or high utilization could impact positions.
Mitigations: Multiply Risk Scorer evaluates pools on 4 dimensions (depeg risk, liquidation proximity, exit liquidity, reserve pressure). Multi-stage deleverage: target health 1.15, soft deleverage at < 1.10, emergency at < 1.05. Active positions stopped at risk score ≥ 75, fully exited at ≥ 90.
3. Funding Rate / Market Risk — Medium
Delta-neutral strategy depends on positive SOL funding rates. Rapid FR reversal may cause losses before positions close.
Mitigations: Entry requires FR > 10% for 3 days. Emergency exit at FR < -10% (no delay). Base Layer continues generating yield during FR downturns.
4. Liquidation Risk — Low
DN uses 1x leverage (margin = position size) — liquidation risk effectively zero. Multiply positions protected by staged deleverage.
5. Exchange / Counterparty Risk — Medium
Delta-neutral currently uses Binance for perpetual futures. Exchange insolvency, API outages, or regulatory actions could affect margin funds held on the CEX.
Mitigations: Position size limits, minimum on-chain balance maintained. A Bulk Trade connector (Solana-native on-chain perp) is under testnet evaluation — if moved to production, it would eliminate CEX custody risk entirely. Migration is contingent on Bulk's mainnet launch and security audit completion.
6. Oracle Risk — Low-Medium
Price data used by the operator stack and underlying protocols may be delayed, manipulated, or stale.
Current repo mitigations: bot-side stale-data alerts, protocol circuit-breaker checks for large USDC price deviation, and protocol-specific risk scoring. This repository does not, by itself, prove a full multi-oracle consensus design.
7. Operational Risk — Low-Medium
Manager Bot is a critical off-chain component.
Mitigations: internal scheduler health monitoring, Docker health checks, retry wrappers, externalized configuration, kill switch and guardrails.
8. Liquidity Risk — Low
Large withdrawals may require unwinding positions.
Mitigations: Buffer maintained (5%), redemption fee (0.1%), locked profit mechanism.
9. Protocol / Composability Risk — Low-Medium
Failure in any composed protocol (lending, Multiply, DEX) could cascade.
Mitigations: Protocol diversification (max 60% per protocol), circuit breaker (auto-exit on TVL crash, oracle drift, withdrawal failure), lending risk scorer tracks incident history.
10. Regulatory Risk — Unknown
DeFi regulations are evolving. Vault operates under non-custodial architecture to reduce regulatory exposure.
11. Solana Network Risk
Network outages, congestion, or consensus issues could prevent operations.
Mitigations: conservative leverage, transaction retry / confirmation logic, and post-failure operator monitoring. Exact on-chain recovery behavior depends on the separate custody layer.
Summary Risk Matrix
Smart Contract
Medium
Multiply / Leverage
Medium
Market / FR
Medium
Liquidation
Low
Exchange
Medium
Oracle
Low-Med
Operational
Low-Med
Liquidity
Low
Protocol
Low-Med
Regulatory
Unknown
Capacity Management
Alpha strategies have limited capacity. Without caps, yield degrades as TVL grows.
Hard Cap
Maximum TVL enforced at the smart contract level
Soft Cap
Warning threshold; new deposits monitored for yield impact
Dynamic Adjustment
Caps adjusted based on market liquidity and strategy capacity
We prioritize quality of yield over quantity of AUM. We would rather run a $5M vault at 15% APY than a $50M vault at 6% APY.
Please do not deposit more than you can afford to lose. Past performance does not guarantee future results. See our Disclaimer for important legal information.
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