Risks
Foundation is committed to transparency. This section outlines the risks associated with participating in the Foundation protocol.
Note: USD' is the base layer asset backed by fiat stablecoins (USDC, USDT) and RWAs. Strategy dollars (PrimeUSD, ApolloUSD, OrdUSD) are built on top of this shared liquidity layer. Each layer carries distinct risks.
Base Layer Risks (USD')
Stablecoin Depeg
USDC or USDT could temporarily lose their peg
Diversified stablecoin backing
RWA Counterparty
RWA token issuers could default
Curated RWA partners, diversification
Smart Contract
Vault contracts could have vulnerabilities
Multiple audits, formal verification
Strategy Layer Risks
PrimeUSD (Lending)
Lending Protocol Risk
Underlying protocols (Aave, Morpho) could experience exploits
Interest Rate Risk
Lending rates are variable and may decrease
Liquidation Risk
Borrowers defaulting could impact yields
ApolloUSD (RWAs)
Counterparty Risk
RWA providers (Acred) could default on obligations
Redemption Risk
RWA redemptions may take 2-7 business days
Regulatory Risk
Changes in regulations could affect RWA accessibility
OrdUSD (Delta-Neutral)
Negative Funding
Funding rates can turn negative, resulting in losses
Exchange Risk
Orderly Network could experience downtime or counterparty issues
Hedging Imperfection
Large price moves may cause temporary deviation from delta-neutral
Smart Contract Risk
Code Vulnerabilities
Bugs in smart contracts could lead to loss of funds
Multiple independent audits, formal verification, bug bounty program
Upgrade Risk
Contract upgrades could introduce vulnerabilities
Timelock on all upgrades, multi-sig governance
Composability Risk
Interactions with external protocols could introduce vulnerabilities
Whitelisted integrations only, continuous monitoring
Liquidity Risk
Buffer Depletion
High redemption volume could temporarily exhaust liquidity buffers
Dynamic buffer sizing, redemption queuing
Market Illiquidity
Underlying assets may be difficult to sell in stressed markets
Diversified collateral, conservative position sizing
Peg Stability
USD' Deviation
USD' may temporarily trade above or below $1.00
Arbitrage incentives, mint/redeem mechanisms
Strategy Loss Impact
Strategy losses reduce share value, not USD' peg
Asset isolation, per-strategy loss absorption
Operational Risk
Oracle Failure
Price feed failures could affect NAV calculations
Multiple oracle sources, circuit breakers
Key Management
Compromised keys could lead to unauthorized actions
Multi-sig wallets, hardware security modules
Third-Party Dependency
External protocol changes could affect operations
Continuous monitoring, contingency planning
Regulatory Risk
Jurisdiction Restrictions
Certain jurisdictions may restrict access to Foundation
Regulatory Changes
Future regulations could impact protocol operations
Compliance Requirements
Institutional users may face additional compliance obligations
Risk Acknowledgment
By participating in Foundation, you acknowledge that:
You have read and understood the risks outlined above
You are only investing capital you can afford to lose
Past performance does not guarantee future returns
Yields are variable and can decrease or become negative
Smart contract interactions carry inherent risks
For questions about risks, please reach out to the Foundation team.
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