Underlying Protocol Risk
Nature of Underlying Protocol Risk
FIVA functions as a yield tokenization layer that works with existing DeFi protocols in the TON ecosystem. This means FIVA's security and operational effectiveness are intrinsically linked to the security and performance of these underlying protocols. When you interact with FIVA, you are indirectly exposed to risks associated with these underlying protocols - Storm Trade, EVAA, Tonstakers.
Underlying protocol risks can manifest in various ways:
Smart contract vulnerabilities in the underlying protocol could affect assets being tokenized by FIVA
Governance decisions by the underlying protocol teams could alter yield mechanisms
Technical upgrades or parameter changes might affect compatibility or performance
Liquidity fluctuations in underlying protocols could influence yield stability
These dependencies create a compound risk profile, where issues in any underlying protocol could potentially cascade to affect FIVA token holders, even if FIVA's own contracts are functioning properly.
FIVA's Approach to Managing Underlying Protocol Risk
FIVA takes a methodical approach to managing underlying protocol risk through several key strategies:
Selective Integration Process:
We prioritize working with proven DeFi protocols in the TON ecosystem
We favor protocols with multiple security audits to ensure code quality
We give preference to protocols with open-source codebases that allow for community review
We assess the track record and technical expertise of the teams behind each protocol
Collaborative Technical Relationships:
We establish direct working relationships with the technical teams of underlying protocols
These relationships enable rapid communication if issues arise
Collaborative troubleshooting ensures faster resolution of any integration challenges
Technical cooperation allows for coordination on upgrades and parameter changes
Continuous Monitoring and Assessment:
Ongoing monitoring of all integrated protocols for potential issues
Analysis of on-chain metrics to identify unusual patterns
User Considerations
Even with FIVA's careful approach to protocol selection and monitoring, users should be aware that:
The interconnected nature of DeFi creates dependencies that cannot be completely isolated
New or innovative protocols might offer attractive yields but could carry higher underlying risk
The relative newness of the TON DeFi ecosystem means many protocols have limited operational history
Yield tokenization adds a layer of abstraction that requires users to understand multiple protocols
We strongly encourage users to:
Research the underlying protocols that FIVA integrates with
Understand how yield is generated at the base level
Consider how risks might compound across protocol layers
Follow updates from both FIVA and the underlying protocols
Diversify their positions across different yield sources when possible
FIVA is committed to building on the strongest foundations available in the TON ecosystem and to providing transparent information about our integrations and their inherent risks.
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