Overview
Tori maintains a Reserve Fund as an additional layer of protection for the protocol and its users. The Reserve Fund serves as a buffer against adverse market conditions, potential strategy losses, and unexpected events. Think of it as a safety cushion that helps the protocol weather difficult periods.Purpose
The Reserve Fund serves multiple critical functions:Risk Buffer
Absorbs potential losses from trading strategies before they impact users
Stability Support
Helps maintain protocol stability during market stress
Operational Continuity
Ensures the protocol can continue operating during adverse conditions
Confidence Builder
Provides users and partners confidence in the protocol’s resilience
How It Works
Funding Sources
The Reserve Fund is built and maintained through:| Source | Description |
|---|---|
| Performance Fees | A portion of the 10% performance fee on strUSD yield |
| Protocol Revenue | Other protocol revenue streams |
| Initial Allocation | Seed capital allocated at launch |
Fund Management
The Reserve Fund is managed with strict principles:| Principle | Implementation |
|---|---|
| Capital Preservation | Conservative investment in highly liquid assets |
| Liquidity | Always available when needed |
| Transparency | Included in Proof of Reserves attestations |
| Independence | Segregated from operational funds |
When the Reserve Fund Is Used
The Reserve Fund may be deployed in scenarios such as:Strategy Losses
If trading strategies incur losses that would otherwise impact user funds, the Reserve Fund can absorb these losses.Market Stress Events
During extreme market conditions that stress the protocol’s operations, the Reserve Fund provides a buffer.Operational Issues
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.
Transparency
Real-Time Visibility
The Reserve Fund is included in the protocol’s Proof of Reserves attestations from Accountable:- Current fund size
- Fund allocation
- Historical changes
- Coverage ratio
Attestation Reports
Regular attestation reports provide detailed information about the Reserve Fund’s status and composition.Understanding the Reserve Fund
The Reserve Fund is a risk management tool - an additional layer of protection, not a guarantee. It’s designed to absorb adverse conditions before they impact users.
How It Helps
| Scenario | Reserve Fund Role |
|---|---|
| Strategy underperformance | Absorbs temporary losses |
| Market volatility | Provides stability buffer |
| Operational issues | Funds available for resolution |
Important Considerations
| Aspect | Details |
|---|---|
| Capacity | The fund has a finite size and is disclosed in Proof of Reserves |
| Not insurance | It’s a protocol-managed buffer, not third-party insurance |
| Best effort | Designed to help but cannot cover all extreme scenarios |
Reserve Fund vs User Funds
It’s important to understand the distinction:| Aspect | Reserve Fund | User Funds |
|---|---|---|
| Ownership | Protocol | Users |
| Purpose | Risk buffer | User deposits |
| Accessibility | Protocol-controlled | User-controlled |
| Reporting | Included in attestations | Included in attestations |