Risk Types & Overview
Using Tydro puts capital at risk. This page summarizes those risks and links to the detail on each. Read it before supplying, borrowing, or allocating.
Using Tydro can result in the loss of some or all of the assets supplied, posted as collateral, or allocated to a vault or strategy. Tydro is lending infrastructure, not financial, legal, or tax advice. Do not commit capital that cannot be afforded as a loss.
Risk is the user's responsibility
Tydro is software for permissionless and institutional lending. It does not assess whether a position is suitable, monitor any account on a user's behalf, or guarantee any outcome. Once capital is committed, the obligation to manage the position rests with the user.
An unhealthy position can be liquidated automatically and without notice. The protocol will not pause to protect a position. Real-time LTV alerts are available in the app to help with monitoring, but the responsibility to act on them rests with the user. See Liquidation Risk.
Summary of risks
Each risk has its own page. The protections referenced on those pages lower risk; they do not remove it.
Smart contract risk. Code can contain errors or be exploited, and upgrade powers can change how the protocol behaves. See Smart Contract Risk.
Governance risk. Governance can change risk parameters, rate models, supply and borrow caps, and upgrade contracts. A fixed borrow rate is set by governance, not locked forever, and can be adjusted within defined bounds. Parameter changes can affect the value of existing positions. See Governance.
Market and collateral risk. Collateral can fall in value sharply, liquidity can disappear, and a market can be left with bad debt. See Market and Collateral risk.
Liquidity and withdrawal risk. Suppliers may not be able to withdraw at all times. When utilization is high, insufficient liquidity may remain in the pool to fulfill a withdrawal until borrowers repay. In fixed-rate markets, the borrow rate does not automatically correct high utilization the way a variable model does, which can extend the period during which withdrawal is constrained. See Market and Collateral Risk.
Liquidation risk. A position that falls below its liquidation threshold can lose collateral and incur a penalty. In a cluster, a price decline in any cluster asset lowers the health factor of the whole position. See Liquidation Risk.
Oracle risk. Prices come from external feeds that can be wrong, stale, or manipulated, which can trigger or prevent liquidations incorrectly. See Price Feed Risk.
Tranche risk. A junior position can lose its full value before a senior position is touched. See Tranching.
Vault and curator risk. Depositing into a vault introduces the curator's and allocator's decisions as an additional risk layer. Curator strategy, allocator execution, and the adequacy of first-loss capital can all affect vault performance independently of the underlying protocol. See Vault Curation and First-loss capital.
Custody and counterparty risk. Use of a custodian and other counterparties introduces risks outside the protocol's code. See Custodian & Counterparty Risk.
RWA and permissioned-asset risk. Real-world assets depend on off-chain legal structures and parties that can fail or be subject to legal action.
Regulatory risk. Tydro operates in a regulatory environment that continues to evolve. Legal action, regulatory orders, or compliance requirements could affect the protocol, its operators, or specific assets, including forcing pauses, restricting access, or freezing assets. This risk is heightened for permissioned assets and real-world asset markets.
Bridging risk. Tydro runs on Ink. Assets bridged to Ink to use the protocol carry bridge risk in addition to protocol risk. A bridge failure or exploit can affect assets before they ever reach Tydro. See Bridge to Ink.
No guarantee of return
Rates on Tydro are set by the market utilization and interest rate model, and they can change. A fixed borrow rate in a market is fixed by governance based on market conditions at the time of being set, not guaranteed forever. Supply rates depend on utilization and can fall to zero if utilization falls to zero. Nothing in this documentation is a promise or projection of yield, return, or performance.
These risks are not exhaustive
This section describes the risks Tydro considers most significant. It does not describe every risk. New risks can arise from market conditions, regulation, third parties, and the broader environment the protocol runs in. The absence of a risk from this section is not a statement that the risk does not exist.
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