Disclosure
Risk
Understanding what can go wrong, and how SPA manages it.
Risk Philosophy
SPA is built on the premise that risk cannot be eliminated — only measured, bounded, and disclosed. Our approach: explicit risk parameters, documented gates, and transparent logging of every limit breach.
Main Risk Categories
Smart Contract Risk
Protocols can have vulnerabilities.
Mitigation: TVL floor, audited protocols only, exposure caps.
Stablecoin Depeg Risk
USDC/USDT/DAI can lose peg.
Mitigation: Diversification across stablecoin types, concentration limits.
Oracle Risk
Price feed manipulation.
Mitigation: Chainlink primary feeds, sanity bounds, multi-source validation for Max Yield.
Protocol Insolvency Risk
Bad debt can socialise losses.
Mitigation: Per-protocol caps (25% max), TVL floor ($500M+).
Liquidity Risk
Inability to exit position at expected price.
Mitigation: Liquidity checks in adapters, cash buffer maintained.
APY Compression Risk
Yields can decline rapidly.
Mitigation: Daily rebalance to highest risk-adjusted yield.
Strategy Risk Matrix
| Risk Type | Preserve | Core | Max Yield |
|---|---|---|---|
| Smart contract | Low | Medium | High |
| Stablecoin depeg | Low | Low | Medium |
| Oracle | Very Low | Low | Medium |
| Protocol insolvency | Very Low | Low | Medium |
| Liquidation | None | None | High |
| Leverage | None | None | High |
| Overall | Lower | Medium | Higher |
Risk Gates (RiskPolicy v1.0)
What happens when a limit is breached:
TVL floor breach
Protocol removed from whitelist
Per-protocol cap breach
Rebalance blocked, logged
Drawdown −5%
Kill switch → portfolio moves to cash
APY outside bounds
Flagged, human review required
Stress Scenarios
How SPA responds to adverse events:
Scenario 1: Major protocol exploit (e.g., $200M hack)
TRIGGER: TVL drops below $500M floor / protocol flagged in monitoring
RESPONSE: Adapter disabled → protocol removed from active allocation → rebalance out in next cycle
Scenario 2: USDC depeg to $0.95
TRIGGER: Oracle price anomaly + concentration check
RESPONSE: APY bounds trigger (yields spike or collapse) → rebalance gate → position review
Scenario 3: Broad market stress, yield compression to <2%
TRIGGER: APY lower bound check (2% floor)
RESPONSE: Positions flagged → partial move to cash buffer → wait for yield normalization
What APY Figures Mean
All APY figures on this site are variable and not a guarantee of future returns.
Paper APY reflects simulated performance on virtual $100,000 USDC — not live trading.
Past paper performance does not indicate future live results.
Target APY profiles (Preserve, Max Yield) are illustrative ranges based on historical protocol yields.
Possible loss of capital in live trading phase.
Full legal disclosure: /risk-disclosure