Some risks to a smart contract system are essential or part of the incentives. For example, the risk of impermanent loss naturally arises from the use of Automated Market Makers. These risks need to be well communicated to protocol users as a way to mitigate their impact. This can be done at the end of the review process once all acceptable/essential risks are known.

Where to communicate risks

Ideally protocol risks are communicated in several areas:

• Project user documentation
• Any integration guides for third-parties
• In the primary consumption interface (e.g., dapp)

As a best practice example, see the Ribbon Finance Theta Vault Risks explanation:

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