Risk Management

All DeFi strategies involve risk. Smart contracts can have vulnerabilities, protocols can fail, and market conditions can change rapidly. We've identified the key risks associated with rgUSD and implemented specific mitigations for each. Understanding these risks is essential before depositing.

Risk Factor	Mitigation Strategy
Protocol Risk	Only lending protocols with liquidity depth, operational resilience and robust liquidation mechanisms integrated.
Cross-Platform Risk	Single platform usage (Drift) for both funding rate farming and collateral hedge ensures zero cross-platform risk and unhedged risks.
Directional Risk	Spot positions are always paired with the same quantity of perp positions, creating a perfect hedge, and eliminating all directional risk.
Transparency & Operational Risk	All positions visible on-chain; live dashboard with health, basis, and PnL metrics.