Security and Risk
Audit Overview
Avon’s core contracts have been audited by five independent firms: Zellic, Guardian, Pashov Audit Group, Valkyri Security, and a public audit competition run by Cantina. Each review targeted different parts of the system, including strategy isolation, interest-rate logic, liquidation behavior, oracle adapters, and order book execution. All findings were fixed and revalidated, giving the protocol broad coverage before launch.
Security Principles
Avon removes discretionary behavior wherever possible. Strategies define their own rules and cannot borrow from each other. Interest curves are fixed in shape. All adjustable parameters are behind timelocks. The order book only reads published levels and cannot change strategy state. This keeps the system predictable and reduces the chances of cross-market failure.
Strategy-Level Risk
Risk in Avon is local. Each strategy carries its own collateral rules, LTV limits, interest curve structure, and oracle setup. A poorly designed strategy cannot affect others. Lenders choose the strategies they want to participate in, and borrowers see exactly which rules apply before taking liquidity.
Protocol-Level Risk
Protocol risk comes from the accuracy of the order book, the consistency of execution, and the reliability of oracle data. Avon depends on high-throughput chains where state updates remain fresh. The system is designed so that even if one strategy misbehaves, no shared pool or global curve can propagate risk across markets.
Liquidation Behavior
Liquidations happen inside each strategy independently. If collateral drops, only the affected component is liquidated. Other strategies remain untouched. This design avoids cascading liquidations and keeps lenders protected from unrelated market conditions.
Oracle Risk Model
Strategies choose their own oracle setup and often use a primary feed from Chainlink Native Oracles with a fallback from Redstone Bolt, or the reverse. If the primary feed becomes stale, the strategy switches to the fallback. Oracle risk stays inside the strategy, and a failure in one does not affect the rest of the protocol.
Known Limitations
Avon does not remove the need for careful strategy design. Strategies with aggressive LTVs or volatile collateral carry higher risk. Borrowers with multi-strategy exposure must understand that rate and health evolve separately in each part. The system also depends on the chain’s ability to keep state fresh; slow networks cannot support this architecture.
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