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

# Risks and Mitigation

## **Risk Overview**

The USD.infra Vault involves real-world infrastructure finance and therefore includes meaningful risk:

* Illiquidity risk: deployed AI infrastructure assets cannot be liquidated instantly. Protocol redemptions are normally funded from the liquidity sleeve, but may be subject to dynamic exit fees, circuit breakers, or a redemption queue if available liquidity approaches the minimum floor. Queue duration depends on contracted revenue, repayments, and new deposits, and is not guaranteed.
* Credit / performance risk: projects or acquisitions may underperform underwriting assumptions.
* Counterparty / operational risk: service provider execution, installation timelines, and operating costs can impact returns.
* Legal / regulatory risk: cross-border compliance and securities classification are non-trivial. Participation is restricted to eligible non-U.S. persons and is subject to transfer restrictions. Eligibility and availability vary by jurisdiction.
* Smart contract risk: on-chain contracts may have vulnerabilities. Audits and cautious rollouts are key mitigations (See [Audits](/build/audits.md)).
* Market risk: secondary-market price of sUSD.infra can deviate from exchange rate during stress. Under the intended DEX price support mechanism, the Vault may use available liquidity to purchase sUSD.infra below exchange rate net of the applicable exit fee. This is intended to provide additional support for secondary-market pricing but does not guarantee any particular market price or trading range.
* Exit cost risk: the exit fee increases as the liquidity sleeve is depleted. Redeeming during a period of elevated redemption activity costs more than redeeming when the sleeve is full. If the applicable fee is determined at settlement, the fee may differ from the fee shown when a request was submitted.
* Redemption throttling risk: aggregate redemptions are capped over a 24-hour period. A participant may be unable to redeem on a given day even when the sleeve is above its floor.
* Redemption eligibility risk: protocol redemption requires verification. Holders who do not complete verification can exit only on the secondary market, at market price and subject to applicable venue, eligibility, and transfer restrictions.

## **Risk Mitigations**

The USD.infra Vault is designed with multiple structural mitigations:

* Bankruptcy-remote SPVs to isolate project assets and protect participant capital.
* Diversification across qualifying projects and counterparties (connectivity today, with CDN and compute next and power to follow) to reduce concentration risk. 
* Explicit redemption policy and liquidity sleeve: immediate exchange-rate redemptions are supported by the liquidity sleeve, while dynamic exit fees, circuit breakers, and queue mechanics protect the Vault during periods of elevated redemption demand.
* Ongoing reporting (Deal Explorer, reserves, performance) to reduce information asymmetry (See [Transparency and Reporting](/usd.infra-vault/transparency-and-reporting.md)).
* Exit fees paid into the Vault, so redeeming participants compensate remaining participants for the liquidity they consume rather than transferring cost onto them.