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 |
| 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 performance | Risk limits, stop-losses, and reserve fund buffer |
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 Sherlock |
| 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 |
Counterparty Risk
The protocol works with various partners and counterparties:
| Partner Type | Our Approach |
|---|
| Trading venues | Only established, reputable exchanges |
| Custodians | Qualified institutional custodians |
| Liquidity providers | Rigorous due diligence standards |
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) |
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 |
|---|
| Network congestion | Build on Ethereum with multi-chain expansion planned |
| Protocol dependencies | Careful selection and monitoring of external protocols |
| Private key security | Users must secure their own wallets - loss is irreversible |
Important Disclaimers
| Disclaimer | Details |
|---|
| No insurance | Deposits 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 |
Security Infrastructure
| Component | Provider | Description |
|---|
| Smart Contract Audits | Sherlock | 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 these risk disclosures
- Are solely responsible for your investment decisions
- Are using funds 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.
Contact: support@tori.finance
Last Updated: December 2025
