> For the complete documentation index, see [llms.txt](https://docs.resupply.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.resupply.finance/faq/risks.md). # Risks Interacting with any DeFi protocol carries risk of loss, and Resupply is no exception. Read this section and the audits before supplying funds. ### Resupply-specific risks * **Peg risk** – **reUSD** is backed by stablecoin denominated lending positions and is kept near $1.00 by a redemption floor (\~$1.00 − fee). Prolonged depegs raise borrowing costs (off-peg fee) and can trigger redemptions against your position. * **Collateral risk** – markets accept volatile collateral (**WETH, wstETH, WBTC**, …, plus stablecoins). A sharp move down can liquidate positions (5% liquidation fee); liquidations settle through the Insurance Pool. * **Insurance Pool tail risk** – insurance stakers earn yield for bearing exactly this risk; in a mass-liquidation or bad debt event, pool **reUSD** is burned and holders absorb the loss beyond pool cover. * **Lending-market / integration risk** – funds sit in Curve Lend, Curve Lend v2 and Fraxlend positions; a bug, exploit or insolvency in those platforms (or their reward vaults — **Convex/Yearn**) could impair collateral. **sreUSD** additionally carries bridge risk (LayerZero OFT). * **Governance risk** – **RSUP** governance can adjust fees, limits, and permissions by vote (30% quorum); staked weight concentration means a majority coalition controls the protocol. * **Oracle / keeper reliance** – interest, liquidations and borrow-limit ramps rely on oracles and the protocol keeper; degraded operation can delay liquidations. ### Third-party reviews always apply Convex Finance, Curve Finance, Frax Finance, LlamaLend v2, and LayerZero carry their own risks — review their docs and risk frameworks too. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.resupply.finance/faq/risks.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.