Smart Contract Risk

Smart contract risk

Tydro is software. Software can contain errors, and the powers that govern it can be misused. This page describes the risk in the protocol's code and control surface.

Code can fail

Tydro is built on the Aave V3 codebase, which is widely deployed and has been audited and used at scale. That history lowers the odds of an undiscovered flaw in the core lending logic, though it cannot drive them to zero. No audit or track record proves code is free of bugs, and a flaw that has not surfaced is still a flaw.

Tydro also adds its own surface area on top of that base. Configuration, oracle integration, custody connections, tranching, and vaults are all places where errors can be introduced, and they have not accumulated the same history as the underlying engine. A failure in any of them can lead to loss of funds.

Known attack classes include flash loan exploits, oracle price manipulation, and reentrancy. The protocol is designed to defend against these, but no design eliminates the risk entirely.

A smart contract exploit or critical bug can result in the partial or total loss of assets held in the protocol, with no guarantee of full recovery. Umbrella provides a first layer of coverage against shortfalls, but does not guarantee complete restitution. See Umbrella.

Upgrade powers carry their own risk

Tydro markets are mutable. Governance can change parameters and upgrade contracts. This is useful for managing risk, and it is also a risk in itself. If an upgrade key is compromised, or an upgrade is made in error, the behavior of the protocol can change in ways that harm users.

Tydro scopes these powers and separates them across roles to limit that exposure, but the powers exist.

Where a component is immutable, the opposite applies. It cannot be changed by a compromised key, and it also cannot be fixed if a flaw is found in it.

What an audit can and cannot tell

Audits and reviews are one input to security. An audit reflects a defined scope and a point in time. It can miss issues, and it does not cover changes made afterward. Treat a completed audit as evidence of the diligence applied, not as proof that funds are safe.

On Aave V3 audits: Tydro's core lending logic is the Aave V3 codebase. The Aave V3 audit set is directly relevant to that base layer and is linked from the Audit reports page. Those audits cover the base codebase, not Tydro's additions. Tydro-specific components, including configuration, oracles, tranching, and vaults, require their own audits, which are listed separately.

See Audit Reports.

Bug bounty and incident response

Details to come.

Dependencies and integrations

Tydro relies on external systems, including price feeds, the Ink network and its bridge, and the custody integration. A failure in any dependency can affect the protocol even when Tydro's own code is sound. See Price Feed Risk and Custody and counterparty risk.