Polycat Finance

Polycat Finance’s Paw was initially quite a risky farm, but after going through our auditing process it now looks much more like a simple, standard farm with a vesting system.

From the technical side of things, although it was odd that certain issues were present in the first place, Polycat has taken the necessary steps throughout the auditing process to resolve them. Because of this, we could not find any vectors in the Masterchef that could lead to the direct loss of staked funds.

As with any yield farm, this does not yet mean that the protocol will be successful or profitable to the average investor. The native token often drops very rapidly after launch so we recommend you to carefully do your research on the project and team and whether these are appropriate for you.

When staking in this project, the main risks you want to look out for are:

• Ensuring that the contract you approve and stake in matches the one we audited. This can be done by comparing the address with the one present in the contracts page in our audit.
• The probability of the native token’s value dropping rapidly simply due to the nature of yield farming. Carefully evaluating the team and project could help with assessing this.
• The value of the locked tokens dropping rapidly and the APR being misleading because of this.

The PolyCat Paw AMM is a simple Uniswap clone with adjusted fees. The only issue which was not present in any Uniswap protocol (PancakeSwap, QuickSwap, etc.) is the slightly miscalculated fees in the router contract. This however did not cause any risk as it would simply charge users 0.06% extra and has now been resolved through a new router deployment.

Since the PolyCat Paw AMM is such a straightforward fork from one of the most audited projects in the world, the code-related risks are absolutely minimal. However, there are still a few risks users should be aware of:

1. Phishing: When any swap frontend is compromised, it is very easy to be mislead into approving or sending out malicious transactions. Checking that the contract address you interact with is the router helps somewhat, but there are other ways by which phishing is still possible like the malicious frontend changing the destination address for the swap tokens.
2. Impermanent loss inherent to staking in any exchange: Since PolyCat Paw sends ~58% of the fees to the feeAddress, there is less fee-based compensation for staking than on other exchanges. Furthermore, since there is likely less volume, the overall fee-based compensation might be insufficient to significantly mitigate the impermanent loss. However, the staking rewards could very well make up for this. As with any LP staking, there is always a risk that impermanent loss will be greater than staking rewards.
3. The probability of the native token’s value dropping rapidly simply due to the nature of yield farming. Carefully evaluating the team and project could help with assessing this.