# Risks

<figure><img src="/files/pYvFtnilNLIzphQQ73gN" alt=""><figcaption></figcaption></figure>

Tydro offers non-custodial access to onchain liquidity but, like any DeFi system, it carries certain risks. Robust risk management measures, including smart contract audits and security frameworks, are in place to help mitigate them. Below is an overview of key risks and mitigation efforts.

### **Smart Contract Risk**

Tydro’s lending engine is powered entirely by decentralised smart contracts. All actions including supplying, borrowing, and liquidation are executed through permissionless contracts, which reduces custodial risk. These contracts undergo audits and security reviews, but no system is entirely free from potential bugs or vulnerabilities. Users should remain aware of the risks involved when interacting with smart contracts.

### **Oracle Risk**

Tydro relies on external oracles for price feeds and data, including redemption ratios for liquid staking tokens. If an oracle fails or is compromised, it could lead to incorrect asset valuations. To mitigate this, Tydro uses decentralised oracle networks such as Chainlink, which are designed to deliver tamper-resistant and reliable data.

### **Collateral Risk**

The value and liquidity of assets used as collateral can fluctuate. A significant drop in collateral value may result in undercollateralisation or liquidation. To manage this, each asset listed on Tydro is configured with loan-to-value ratios and liquidation thresholds that reflect current market conditions.

### Network / Bridge Risk

Tydro is deployed across multiple blockchains. While the protocol does not depend on cross-chain bridges to move liquidity, multichain deployment increases exposure to network-specific risks such as congestion, downtime, or chain vulnerabilities. These risks are assessed before expanding to new networks.

For additional information on Tydro risk management, see <mark style="color:blue;">Security & Audits.</mark>


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.tydro.com/resources/risks.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.