Risk Disclosures

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

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.

Risk Categories

Strategy Risk

Yield is generated through trading strategies that have been used by institutional traders for decades:

Risk	Description	How We Manage It
Performance	Strategies may underperform in certain conditions	Diversification across multiple uncorrelated strategies
Temporary Drawdowns	Positions may show paper losses before converging	Delta-neutral design aims to have positions resolve over time
Execution	Trades may not execute as intended	Professional execution and monitoring systems
Capacity	Returns may compress as AUM grows	Careful capacity management and strategy rotation
Market Conditions	Extreme environments may impact timing of convergence	Risk limits and professional monitoring
Hedging	Delta-neutral strategies aim to minimize but may not fully eliminate directional exposure	Continuous 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.

Smart Contract Risk

Tori relies on smart contracts deployed on blockchain networks. We take security seriously:

Risk	How We Mitigate
Code vulnerabilities	Comprehensive audits by tier-1 firms
Ongoing issues	Active bug bounty program incentivizes discovery
Real-time threats	24/7 monitoring by Hypernative + internal systems
Upgrade risks	Multi-signature requirements and time locks

While audits significantly reduce risk, they cannot guarantee the absence of all vulnerabilities.

Counterparty Risk

The protocol works with various partners and counterparties:

Partner Type	Our Approach
Trading venues and institutional partners	Only established, reputable counterparties
Custodians	Qualified institutional custodians
Liquidity providers	Rigorous due diligence standards
Financial instruments	Regulated products where appropriate

We maintain strict counterparty standards and diversify across multiple partners to reduce concentration risk.

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.

Liquidity Risk

Aspect	Details
Unstaking cooldown	7-day period allows orderly redemption processing
Market liquidity	Varies based on trading conditions
Exit flexibility	Swap on DEXs for immediate liquidity (subject to market rates)

The cooldown period is designed to ensure stable liquidity management for all users.

Regulatory Risk

The regulatory environment for crypto continues to evolve:

Consideration	Details
Changing laws	Regulations may change in various jurisdictions
User responsibility	You are responsible for compliance with your local laws
Adaptability	We monitor regulatory developments and adapt accordingly

Technology Risk

Blockchain technology has inherent considerations:

Risk	Mitigation
Protocol dependencies	Careful selection and monitoring of external protocols
Cross-chain bridges	Chainlink CCIP will be used for multi-chain transfers; bridge protocols carry inherent risk
Private key security	Users must secure their own wallets - loss is irreversible

Important Disclaimers

Disclaimer	Details
No insurance	trUSD/strUSD are not insured by FDIC or any government agency
No guaranteed returns	Yields are variable and depend on market conditions
As-is basis	The 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.

Security Infrastructure

Component	Provider	Description
Smart Contract Audits	Sherlock and Nethermind	Comprehensive security audits
Real-Time Monitoring	Hypernative + Internal	24/7 threat detection
Proof of Reserves	Accountable	Independent attestations

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

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. Join our Discord for support and community discussion.

Last Updated: June 2026

Getting Started

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Solution

Strategy

Security

Resources

FAQ

Legal

Overview

Risk Categories

Strategy Risk

Smart Contract Risk

Counterparty Risk

Peg Risk

Liquidity Risk

Regulatory Risk

Technology Risk

Important Disclaimers

Security Infrastructure

Your Responsibilities

Questions?

​Overview

​Risk Categories

​Strategy Risk

​Smart Contract Risk

​Counterparty Risk

​Peg Risk

​Liquidity Risk

​Regulatory Risk

​Technology Risk

​Important Disclaimers

​Security Infrastructure

​Your Responsibilities

​Questions?

Overview

Risk Categories

Strategy Risk

Smart Contract Risk

Counterparty Risk

Peg Risk

Liquidity Risk

Regulatory Risk

Technology Risk

Important Disclaimers

Security Infrastructure

Your Responsibilities

Questions?