> For the complete documentation index, see [llms.txt](https://docs.regenerative.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.regenerative.fi/usdrefi/know-risks.md).

# Know Risks

USDREFI is transparent about its risks. It is not a risk-free product and is not designed to be fully trustless — it is designed to be transparent and accountable.

## Key Risks

**Liquidity risk:** Exiting USDREFI depends on Uniswap pool depth. In stressed conditions, you may experience slippage or be unable to swap the full amount at \~$1. The Foundation Safe can enable emergency direct vault withdrawals if the pool loses critical liquidity.

**Credit risk:** The underlying yield comes from real-world loans. Borrowers may default, which would reduce effective yield. The Credit Curation Framework mitigates this through structured evaluation, but it cannot eliminate default risk.

**Operational risk:** Users rely on multisig operators (Foundation Safe) and the governance process to act competently. Capital deployment, yield collection, and reward distribution are currently manual processes.

**Price risk:** USDREFI is designed to trade near $1 but is not a hard-pegged stablecoin. It may trade at a premium or discount depending on market conditions and pool liquidity.

**Reward risk:** Reward rates are set by the Foundation and are not guaranteed. They may change based on yield from underlying sources.

## Trust Assumptions

Using USDREFI means trusting:

* **The curated originators** — that they are lending responsibly and generating real yield
* **The vault operators** — that the Foundation Safe multisig deploys and manages capital correctly
* **The governance process** — that the Credit Curation Framework is applied honestly and rigorously
* **The identity system** — that tier assignment and access control function as described

The Credit Curation Framework is what earns and maintains that trust through structured, repeatable evaluation. All positions are reviewed annually, with triggered re-evaluations for material changes.

## Mint Caps as Risk Management

Mint caps are a core risk tool:

* **Global cap** limits total TVL exposure
* **Per-user caps** (by tier) reduce concentration risk
* Caps are raised gradually as liquidity depth and operational confidence increase


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