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This page provides important information about risks. We believe in transparency. Understanding risks helps you make informed decisions.

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Overview

Like all DeFi products, using Tori Finance involves risks. We’ve designed the protocol with multiple safeguards, but no system can eliminate all risks. This page outlines what you should know. Key point: trUSD is a synthetic dollar backed by trading positions, which is different from fiat-backed stablecoins like USDC or USDT.

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Risk Categories

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Strategy Risk

Yield is generated through trading strategies that have been used by institutional traders for decades:
RiskDescriptionHow We Manage It
PerformanceStrategies may underperform in certain conditionsDiversification across multiple uncorrelated strategies
Temporary DrawdownsPositions may show paper losses before convergingDelta-neutral design aims to have positions resolve over time
ExecutionTrades may not execute as intendedProfessional execution and monitoring systems
CapacityReturns may compress as AUM growsCareful capacity management and strategy rotation
Market ConditionsExtreme environments may impact timing of convergenceRisk limits and professional monitoring
HedgingDelta-neutral strategies aim to minimize but may not fully eliminate directional exposureContinuous monitoring and rebalancing
Delta-neutral strategies may experience temporary fluctuations. These are expected and typically resolve as positions converge. This is normal behavior, not a permanent loss.
Past performance does not guarantee future results. Yields are variable based on market conditions.

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Smart Contract Risk

Tori relies on smart contracts deployed on blockchain networks. We take security seriously:
RiskHow We Mitigate
Code vulnerabilitiesComprehensive audits by tier-1 firms
Ongoing issuesActive bug bounty program incentivizes discovery
Real-time threats24/7 monitoring by Hypernative + internal systems
Upgrade risksMulti-signature requirements and time locks
While audits significantly reduce risk, they cannot guarantee the absence of all vulnerabilities.

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Counterparty Risk

The protocol works with various partners and counterparties:
Partner TypeOur Approach
Trading venues and institutional partnersOnly established, reputable counterparties
CustodiansQualified institutional custodians
Liquidity providersRigorous due diligence standards
Financial instrumentsRegulated products where appropriate
We maintain strict counterparty standards and diversify across multiple partners to reduce concentration risk.

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Peg Risk

trUSD is designed to track $1.00, with economic incentives that work to maintain the peg:
  • Market price may fluctuate - temporary deviations from $1 can occur
  • Self-correcting mechanism - deviations create arbitrage opportunities that naturally restore the peg
  • Protocol participation - the protocol may also participate in arbitrage when beneficial
Deviations are typically temporary. The larger the deviation, the greater the profit opportunity for arbitrageurs to correct it. See Peg Mechanism for details.

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Liquidity Risk

AspectDetails
Unstaking cooldown7-day period allows orderly redemption processing
Market liquidityVaries based on trading conditions
Exit flexibilitySwap on DEXs for immediate liquidity (subject to market rates)
The cooldown period is designed to ensure stable liquidity management for all users.

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Regulatory Risk

The regulatory environment for crypto continues to evolve:
ConsiderationDetails
Changing lawsRegulations may change in various jurisdictions
User responsibilityYou are responsible for compliance with your local laws
AdaptabilityWe monitor regulatory developments and adapt accordingly

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Technology Risk

Blockchain technology has inherent considerations:
RiskMitigation
Protocol dependenciesCareful selection and monitoring of external protocols
Cross-chain bridgesChainlink CCIP will be used for multi-chain transfers; bridge protocols carry inherent risk
Private key securityUsers must secure their own wallets - loss is irreversible

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Important Disclaimers

DisclaimerDetails
No insurancetrUSD/strUSD are not insured by FDIC or any government agency
No guaranteed returnsYields are variable and depend on market conditions
As-is basisThe protocol is provided without warranties
This is consistent with virtually all DeFi protocols. We compensate for this through complete transparency and tier-1 security measures.

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Security Infrastructure

ComponentProviderDescription
Smart Contract AuditsSherlockComprehensive security audits
Real-Time MonitoringHypernative + Internal24/7 threat detection
Proof of ReservesAccountableIndependent attestations

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Your Responsibilities

By using Tori Finance, you acknowledge that you:
  • Have read and understood the Terms of Service, including General Risk Disclosures
  • Are solely responsible for your decisions to use the protocol
  • Are using amounts appropriate to your personal risk tolerance
  • Have conducted your own research and due diligence
  • Are complying with applicable laws in your jurisdiction

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Questions?

This document is for informational purposes and is not financial, legal, or tax advice. If you have questions about risks or how Tori works, we’re happy to help. Our community is opening soon and will be the home for support and community discussion.
Last Updated: March 2026