Dynamic Earn on Flipster allows users to earn yield through third-party, on-chain strategies provided by our liquidity partner. While this product is designed to offer attractive returns, it also involves certain risks inherent to decentralized finance (DeFi).
This article explains the key risks you should understand before subscribing: Smart Contract Risk, NAV Risk, and Liquidity Risk.
Smart Contract Risk
Dynamic Earn uses smart contracts operated by our external liquidity provider. These contracts automate transactions, yield strategies, and asset management on-chain.
What is Smart Contract Risk?
Smart contract risk refers to the possibility of:
Bugs or coding errors that behave unexpectedly
Vulnerabilities or exploits that could be targeted by attackers
Integration risks from interacting with other protocols
If a smart contract behaves incorrectly or is compromised, it may cause delayed transactions, incorrect NAV valuations, or, in severe cases, loss of assets.
How Flipster Mitigates This Risk
Partnerships with vetted, institutional-grade liquidity providers
Providers use audited or battle-tested smart contracts
Continuous monitoring of provider performance and strategy health
However, no smart contract is entirely risk-free, and users should understand this before subscribing.
NAV Risk (Valuation Risk)
Dynamic Earn uses a Yield-Bearing Token (YBT), IGNUSDT, whose value is represented by NAV (Net Asset Value). NAV measures the per-token worth based on the underlying strategy’s performance.
What is NAV Risk?
Although NAV generally trends upward as yield accrues, it may increase slower than expected, remain flat, or decrease due to:
Strategy underperformance
Market volatility or adverse market events
Temporary valuation adjustments
Fees or expenses charged by the liquidity provider
Changes in APR
A decrease in NAV directly reduces the value of your Dynamic Earn holdings at redemption.
Examples of NAV Impact
If market yields drop suddenly → NAV grows more slowly
If the underlying strategy takes a loss → NAV may decline
If on-chain liquidity shifts → NAV may temporarily adjust downward
NAV is not guaranteed to increase, and users may receive less than their initial subscription amount in the event of negative performance.
Liquidity Risk
Liquidity risk refers to the possibility that the underlying strategy may not have sufficient liquid assets available at the time you request Standard Redemption.
How Liquidity Risk Affects You
Liquidity constraints may result in:
Delays in Standard Redemption (typically 1–2 business days)
Temporary redemption caps depending on available withdrawable funds
Liquidity depends on:
On-chain pool availability
Market conditions
Strategy-specific liquidity cycles
Flipster always processes redemption requests based on the latest NAV and protocol liquidity, but delays can occur if on-chain liquidity is limited.
Additional General Risks
While Dynamic Earn prioritizes safe and optimized yield opportunities, users should also be aware of the following broader risks:
Market / Yield Volatility: APR may fluctuate significantly over short periods.
Counterparty Risk: Dynamic Earn depends on a third-party provider (Ignight Capital). Poor performance or operational issues may affect yields or redemption timelines.
Regulatory Risk: Changes in DeFi or crypto regulations may affect strategy operations or access.
Technology and Network Risks: Network congestion, blockchain downtime, or infrastructure outages may affect subscription, redemption, or price updates.
User Responsibility & Best Practices
Before subscribing to Dynamic Earn, consider the following best practices:
Only allocate funds you are comfortable exposing to DeFi-related risk.
Review NAV regularly to understand how your performance is tracking.
Keep in mind that APR is indicative, not guaranteed.
Plan ahead for liquidity: Standard Redemption operates on a settlement cycle (1–2 business days).
Understand that you may receive a slightly different redemption amount than expected due to NAV changes.
Summary of Key Risks
| Risk Type | Explanation | Potential Impact |
| Smart Contract Risk | Code vulnerabilities or protocol exploits | Loss of funds, strategy disruption, NAV impact |
| NAV Risk | Changes in strategy performance affecting token value | Lower returns or potential capital loss |
| Liquidity Risk | Insufficient on-chain liquidity for redemptions | Delayed withdrawals, redemption limits |