Operation

In the context of DeFi protocols and risk monitoring, it's crucial to track changes related to operation, particularly those concerning contract upgrades, parameter changes, and admin changes. These aspects can directly impact the security and functioning of the platform. Let's examine each of these components in more detail.

Contract upgrade (Severity: Medium)

Contract upgrades refer to updates or modifications made to a smart contract's code, which can be necessary for fixing bugs, improving performance, or adding new features. However, contract upgrades can also introduce new vulnerabilities or risks, especially if not thoroughly audited and tested before deployment. Monitoring contract upgrades allows users and platforms to stay informed about changes, assess the potential impact on their investments, and react accordingly. One possible action to mitigate risks associated with contract upgrades is implementing a Secure cooldown period. This period allows users and platforms to review the changes and make any necessary adjustments before the upgraded contract becomes fully operational.

Parameter change (Severity: Medium)

Parameter changes can be a warning sign because they involve modifications to the underlying settings or configurations of a smart contract or protocol. These alterations can have significant implications for users, making it essential to monitor such changes. The reasons for concern regarding parameter changes are:

1. Imbalance risks: Changes in parameters, such as collateral ratios, interest rates, or borrowing limits, can introduce imbalances in the system, increasing the risk of liquidations, insolvency, or other adverse events affecting users' investments.

2. Manipulation: A malicious actor with access to modify parameters might attempt to exploit the system for personal gain, leading to unfavorable consequences for other users, such as artificially inflating rewards or creating arbitrage opportunities.

3. Unintended consequences: Even well-intentioned parameter changes can have unintended side effects that negatively impact the protocol's stability, security, or user experience. This could result from inadequate testing, a lack of understanding of the system's complexities, or unforeseen interactions with other elements of the DeFi ecosystem.

Admin changes (Severity: Medium)

Admin changes can be a warning sign because they involve alterations in the administrative control or ownership of a smart contract or protocol. The reasons for concern regarding admin changes are:

1. Change in intentions: A new administrator may have different objectives or intentions compared to the previous one, leading to changes in the platform's strategy, security measures, or overall direction, which might not align with users' interests.

2. Centralization risk: An admin change might lead to a single entity or individual gaining control over multiple protocols or smart contracts, increasing centralization risks and making the ecosystem more vulnerable to attacks or manipulations.

3. Insider attacks: A malicious actor gaining administrative control could potentially exploit the protocol for personal gain, causing harm to the platform and its users, such as manipulating parameters, draining funds, or making unauthorized changes to the smart contract code.