Risk Control

Pinnako is dedicated to minimizing risk in order to protect liquidity providers' funds and provide a safe, fair protocol for traders to swap and trade perpetual futures contracts. Several risk control measures have been implemented, and we will continue to monitor and adapt our strategy moving forward:

Oracle Update Front Running

Risk

Bots may exploit the liquidity pool by front running the price update transaction with a favorable trade, armed with knowledge of the next Oracle price.

Control

Continuous on-chain Oracle price updates are essential for maintaining Pinnako's swap and perpetual services. As it is impossible to prevent bots from knowing the next Oracle update price, an effective solution is to separate the order request and order execution processes.

Implementation

Pinnako handles traders' order requests and order executions in two distinct transactions.

Price Manipulation

Risk

Manipulators may profit from futures contract trades by manipulating the Oracle price, potentially draining the liquidity pool.

Control

Previous exploits have demonstrated that simply using price feeds from Chainlink does not accurately represent actual market conditions. Most manipulations take advantage of shallow liquidity depth to move the market in their favor and execute an exploit.

Implementation

After extensive research, our Oracle price now factors in order book depth from various centralized exchanges such as Binance, OKX, and Bybit. Pinnako also prioritizes markets with robust liquidity depth or high market capitalization to further reduce the risk of manipulation.