# 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') | Risk | Description | Mitigation | | -------------------- | --------------------------------------------- | ------------------------------------- | | **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) | Risk | Description | | ------------------------- | ------------------------------------------------------------- | | **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) | Risk | Description | | --------------------- | ----------------------------------------------------- | | **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) | Risk | Description | | ------------------------ | ------------------------------------------------------------------ | | **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 | Risk | Description | Mitigation | | ------------------------ | -------------------------------------------------------------------- | -------------------------------------------------------------------- | | **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 | Risk | Description | Mitigation | | ---------------------- | ------------------------------------------------------------------ | ---------------------------------------------------- | | **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 | Risk | Description | Mitigation | | ------------------------ | ------------------------------------------------ | --------------------------------------------- | | **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 | Risk | Description | Mitigation | | -------------------------- | --------------------------------------------------- | -------------------------------------------- | | **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 | Risk | Description | | ----------------------------- | -------------------------------------------------------------- | | **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: 1. You have read and understood the risks outlined above 2. You are only investing capital you can afford to lose 3. Past performance does not guarantee future returns 4. Yields are variable and can decrease or become negative 5. Smart contract interactions carry inherent risks *** *For questions about risks, please reach out to the Foundation team.* --- # 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.synnax.fi/technical-reference/risks.md?ask= ``` 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. 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