Risks

Taper changes how a falling price treats your loan. It does not remove the risk of borrowing or lending. This page lists what can go wrong, plainly.

If you borrow

Conversion loss. Bands sell a little under the market and buy back a little over it. A price that chops inside your range for days costs you on every pass. The loss is real money and does not come back when the price does. The app shows it as Versus holding on your loan.

Gaps. Bands convert only while the price moves through them. If the price jumps past several bands in one update, as NVDAx can at the open or JitoSOL in a depeg, those bands sell at the new price. If health falls below zero, the loan is liquidated.

No arbitrage, no conversion. Bands convert only when someone trades with them. In a thin market, or right after a fast move while the jump fee is high, conversion trails the price, and a falling price eats into health instead.

Liquidation takes everything in your bands. You keep what you borrowed, but your collateral and band dollars go. See Health and liquidation.

The oracle can stop. If Pyth stops publishing a fresh price, nothing that needs one can run: no band trades, no liquidations, no new loans. A price that resumes far from where it stopped behaves like a gap.

Interest changes. The borrow rate follows how much of the pool is lent and can rise to 20% a year while your loan is open.

If you lend

Shortfalls. When a liquidation recovers less than a loan's debt, the difference comes off the pool's value. All lenders in that market share it.

Timing. The pool counts what borrowers owe at face value until a liquidation realizes a loss. Lenders who withdraw while an underwater loan is still open leave that loss to the lenders who stay.

Locked liquidity. You can withdraw only the pool's idle cash. When most of it is lent, withdrawals wait for borrowers to repay.

For everyone

Software. Taper is a program on Solana. It has been tested with signed-transaction tests on the built program, exact comparisons between the SDK's math and the program's, and thousands of adversarial trade sequences. Testing can still miss a bug, and a bug can lose funds.

USDC. Every loan and every pool is in USDC. Circle can freeze USDC accounts, and a USDC depeg would move every balance on Taper with it.

NVDAx's issuer. The issuer of NVDAx can move, freeze or burn NVDAx tokens anywhere, including in Taper's vault, and can pause transfers. See NVDAx and trading sessions.

Solana. If the network halts or is congested, transactions may not land when you want them to: repayments, closes, arbitrage and liquidations alike.