> For the complete documentation index, see [llms.txt](https://docs.tydro.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tydro.com/v.-risk/risk-types-and-overview/custodian-and-counterparty-risk.md). # Custodian & Counterparty Risk Using Tydro can involve a custodian and other counterparties. These introduce risks that sit outside the protocol's code ### Custodian risk Where assets are held through Kraken qualified custody, the holder relies on that custodian. A custodian can suffer operational failure, become insolvent, freeze or restrict access to assets, or be subject to legal or regulatory action that affects those assets. Qualified custody brings regulated standards and controls to how assets are held, while leaving counterparty exposure to the custodian itself. See [Qualified Custody](/iv.-tydro-institutional/institutional-overview/qualified-custody.md). {% hint style="warning" %} Holding assets with a custodian means access to those assets depends on the custodian's solvency, operations, and legal standing. {% endhint %} ### Counterparty risk in products Some products involve other parties. A vault depends on its curator and allocator to act within their mandate. A term facility depends on the parties to it. A first-loss provider depends on the capital being present and sufficient. Each relationship is a counterparty exposure in addition to the protocol. See [Lending Vaults](/ii.-core-concepts/lending-vaults.md) and [Vault Curation](/iv.-tydro-institutional/institutional-overview/vault-curation.md). ### Insurance is conditional and may not apply Where insurance coverage is arranged, it is subject to its own terms, scope, limits, and exclusions, and it may not cover a given loss or be in force for a given position. Do not treat insurance as a backstop for a position unless the coverage is confirmed to apply to it. See [Insurance Coverage](/iv.-tydro-institutional/institutional-overview/first-loss-capital-and-insurance.md). ### Regulatory risk The legal and regulatory treatment of on-chain lending, custody, and the assets involved can change. Regulatory action can affect access to the protocol, the status of an asset, or a counterparty the position depends on. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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, and the optional `goal` query parameter: ``` GET https://docs.tydro.com/v.-risk/risk-types-and-overview/custodian-and-counterparty-risk.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. 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.