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

# Risks

Stormbit contracts are audited by Cantina and Pashov Audit Group. All findings resolved ([reports](/resources/audits.md)). 396 tests across protocol and options engine. UUPS upgradeability with multi-sig controls and emergency pause.

The desk's working assumption is that its models are wrong somewhere — the engine publishes its own error rate so that drift shows up in the open, not in the book.

***

| Risk                          | What happens                                                                   | How it's mitigated                                                                                            |
| ----------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- |
| **Smart contract**            | Exploit or bug in protocol code                                                | Dual audit (Cantina + Pashov), 396 tests, multi-sig upgrades, emergency pause                                 |
| **Options counterparty**      | A venue or desk fails to settle an option leg                                  | Established venue (Deribit); pricing cross-checked against live OTC quotes                                    |
| **Premium compression**       | Implied volatility falls; collar premiums thin out and lender yield compresses | Floor mechanism on soUSD tenors; origination pauses rather than writing mispriced collars                     |
| **Mispricing**                | The engine prices a collar wrong                                               | Weekly calibration against live OTC quotes, 6+ year backtest, published error rate, adaptive strike selection |
| **Capped upside (borrowers)** | Collateral rallies above the call strike during the term                       | Disclosed at quote time — the cap is the loan's price, set before funding                                     |
| **Capital lock**              | Lender funds in active loans are locked until loan settlement                  | Tenor chosen at deposit; unallocated funds withdrawable                                                       |
| **Oracle**                    | Incorrect price feed at origination or settlement                              | Multiple oracle sources with staleness checks. Prices used only at origination and maturity                   |
| **Market**                    | Extreme moves beyond the floor's coverage                                      | Over-collateralization + put floor sized per loan at origination; short-dated expiries                        |

***

***

**Important Disclaimers**

The information provided on this website and documentation does not constitute investment advice, financial advice, trading advice, or any other form of advice. You should not treat any of the content as such.

Stormbit Labs Pte. Ltd. does not recommend that any digital asset should be bought, sold, or held by you. All yields displayed are variable, not guaranteed, and subject to change based on market conditions. Past performance is not indicative of future results.

You are solely responsible for conducting your own due diligence and for making your own investment decisions. Use of the Stormbit Protocol involves significant risk, including but not limited to smart contract risk, market risk, counterparty risk, and the potential for total loss of deposited funds.

Only use capital you can afford to lose. See our [Terms of Service](/resources/terms-of-service.md) for full details.


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