Overview
Tori maintains a Reserve Fund as an additional layer of protection for extraordinary circumstances. The Reserve Fund serves as a buffer against unexpected events and extreme scenarios that fall outside normal operations.Normal Drawdowns vs Extraordinary Events
Understanding this distinction is key:Why Normal Drawdowns Don’t Use the Reserve Fund
Our strategies are delta-neutral: they have offsetting positions that converge over time. During periods of market stress:- Positions may temporarily show paper losses
- As markets normalize, these positions resolve
- This is expected behavior, not a loss requiring reserve deployment
Purpose
The Reserve Fund serves specific critical functions:Emergency Buffer
Protection against unexpected counterparty failures or extreme events
Operational Continuity
Ensures the protocol can continue operating during unforeseen circumstances
Extreme Event Protection
Buffer for black swan events outside normal market behavior
Confidence Builder
Demonstrates the protocol’s commitment to resilience
How It Works
Funding Sources
The Reserve Fund is built and maintained through:Fund Management
The Reserve Fund is managed with strict principles:When the Reserve Fund Is Used
The Reserve Fund may be deployed in extraordinary scenarios such as:Counterparty Failures
If a counterparty experiences unexpected failure, the Reserve Fund provides a buffer while the situation is resolved.Extreme Market Dislocations
In truly exceptional market conditions that exceed historical stress parameters, the Reserve Fund can be deployed.Operational Emergencies
If unexpected operational issues arise that require capital to resolve, the Reserve Fund can be deployed.The decision to deploy Reserve Fund capital is made by protocol governance following established guidelines and thresholds. Normal strategy fluctuations do not trigger deployment.
Transparency
Real-Time Visibility
The Reserve Fund will be included in the protocol’s Proof of Reserves attestations from Accountable:- Current fund size
- Historical changes
- Coverage ratio
Attestation Reports
Regular attestation reports provide detailed information about the Reserve Fund’s status and composition.Understanding the Reserve Fund
What It’s For
What It’s NOT For
Important Considerations
The Reserve Fund is one of several protective measures, alongside diversified strategies, risk controls, and professional management.
Reserve Fund vs Backing Assets
It’s important to understand the distinction:Next Steps
Backing
How trUSD is backed
Peg Mechanism
How the peg is maintained
Security
Security measures
Risks
Understand all the risks