Risks

There exist a number of potential risks when staking CFX using liquid staking protocols.

Smart contract security

There is an inherent risk that Nucleon could contain a smart contract vulnerability or bug. The Nucleon code is open-sourced, audited and covered by an extensive bug bounty program to minimise this risk.

Conflux PoS network - Technical risk

NUCLEON is built on Conflux and there is no guarantee that Conflux PoS network has been developed error-free. Any vulnerabilities inherent to Conflux PoS network brings with it slashing risk, as well as xCFX fluctuation risk.

Slashing risk

Conflux PoS validators risk staking penalties, with up to 100% of staked funds at risk if validators fail. To minimise this risk, NUCLEON stakes across multiple professional and reputable node operators with heterogeneous setups, with additional mitigation in the form of coverage that is paid from NUCLEON fees.

xCFX price risk

Users risk an exchange price of xCFX which is lower than inherent value due to withdrawal restrictions, making arbitrage and risk-free market-making impossible. The X DAO is driven to mitigate above risks and eliminate them entirely to the extent possible. Despite this, they may still exist and, as such, it is our duty to communicate with them.