> ## Documentation Index
> Fetch the complete documentation index at: https://docs.berafarm.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk disclosure

> Tranche, smart contract, strategy, withdrawal, oracle, governance, and operational risks every Berafarm depositor should read before depositing.

### Tranche risk

Each vault splits into two tranches sharing one pool of strategies: **Stable** and **Alpha**. Every settlement, the **waterfall** decides who gets the profit and who eats the loss.

| The vault                       | Stable gets                   | Alpha gets           |
| ------------------------------- | ----------------------------- | -------------------- |
| Gains more than Stable's target | its target                    | the rest             |
| Gains less than the target      | all of it                     | nothing              |
| Is flat                         | nothing                       | nothing              |
| Loses money                     | nothing, until Alpha is empty | the loss, up to 100% |

**When Alpha loses money.** Alpha moves at a multiple of the vault, the inverse of its share of the vault. At a 20% Alpha share, Alpha moves 5x.

Example: a 1,000,000 HONEY vault, 800,000 Stable / 200,000 Alpha. Strategies drop 25%, a loss of 250,000. Alpha absorbs the first 200,000 and goes to **zero**. The remaining 50,000 comes out of Stable, a **6.25% loss** for Stable. There's no clawback: a later profitable settlement pays Stable and Alpha as normal, with no memory of what Stable lost.

**Stable is not risk-free.** Its target is a cap on the upside, not a guarantee. If profit falls short of the target, Stable takes whatever profit exists and the rest is **forfeited, not carried to the next settlement**. Stable earns nothing in a flat or losing period. And coverage - Alpha's share of the vault - is observed in the app, not enforced on-chain: nothing stops it from drifting down, which raises Stable's real exposure.

### Smart contract risk

Berafarm's contracts are new and not yet reviewed by a third-party auditor. → [\[Audits\]](/security-and-risk/audit)

Live vaults currently deploy into three external protocols: **Kodiak** (concentrated liquidity), **Dolomite** (lending), and **Bend** (lending, via Re7 and Clearstar). A bug or exploit in any of them is a loss to the vault, absorbed by Alpha first. More protocols may be added over time — check → \[Contract addresses] for the live set.

### Strategy and market risk

* **Impermanent loss** on Kodiak's concentrated LP sleeves when the paired assets move apart in price.
* **Depeg risk** on any paired asset the vault holds (HONEY, USDe, stables).
* **Incentive decay** : much of the yield is emissions-based and can shrink; Alpha feels this first, since Stable is paid before Alpha sees anything.
* **Liquidity depth** : sleeve size isn't bounded by pool depth, only by the vault's TVL and per-user limits.

### Withdrawal and liquidity risk

Deposits and withdrawals are instant, with no queue. That also means your withdrawal unwinds real positions live, at whatever the market gives you right then.

**You can receive less than your shares are worth.** Shares burn for a claim at the current share price; you're paid what the unwind actually realizes, capped at that claim. A large withdrawal against thin liquidity, or a paused sleeve being skipped in the unwind, both mean you realize less.

A global pause (→ [\[Admin controls\]](/security-and-risk/admin-controls)) blocks withdrawals entirely. Exit fees apply only inside a time window after deposit; current windows are on → [\[Admin controls\].](/security-and-risk/admin-controls)

### Oracle and pricing risk

Share price is book value divided by share supply, and book value comes from the strategies' reported value. LP sleeves are valued using **oracle prices**, not the pool's live spot price deliberately, to resist same-block price manipulation.

That makes the oracle itself a dependency: a stale or invalid price feed blocks deposits and withdrawals until it recovers; a live-but-wrong price feed can mis-value the vault while it's within its staleness window. Feed configuration can change instantly, with no delay.

### Governance and parameter risk

| Parameter                                                      | Ceiling  | Delay    |
| -------------------------------------------------------------- | -------- | -------- |
| Entry / exit fee                                               | 2%       | 2 days   |
| Performance fee                                                | 50%      | 2 days   |
| Stable target rate                                             | **none** | 2 days   |
| Everything else (limits, slippage, pauses, rotation, upgrades) | --       | **none** |

Two things worth flagging: **the Stable target rate has no upper bound,** set too high. It starves Alpha or overflows and bricks the vault. And **slippage tolerances can legally be set to 100%**, accepting near-zero output on a swap.

### Operational and key-person risk

Berafarm is actively managed. We choose the sleeves, set the weights, and decide when to rotate, team judgment is a risk factor a passive vault doesn't carry. Rotation happens in one transaction at whatever slippage is configured. Upgrade authority sits behind a Safe multisig with no timelock; → [\[Admin controls\]](/security-and-risk/admin-controls) covers key holders.

What the **contract enforces** (the ceilings and delays above) is different from what the **team commits to** (announcing rotations, using pause switches only in emergencies). The second is policy, and policy can change.

### Verify it yourself

| What                                  | Where                                                             |
| ------------------------------------- | ----------------------------------------------------------------- |
| WBERA vault                           | `0x93355174BFc61f7815ec48A030d2852F970f403d`                      |
| HONEY vault                           | `0x12a656FA4257cdCEeFbAa5fDcdAd6026fd0423F2`                      |
| Full address list                     | → [\[Contract addresses\]](/security-and-risk/contract-addresses) |
| A settlement, a deposit, a withdrawal | `[tx hash]`                                                       |

***