There are a few risks associated with tokenized strategies - beyond the risk of the strategy itself (detailed here). It is important users are aware of these risks before depositing to or acquiring a tokenized strategy. Note that this is not necessarily an exhaustive list.

In rare cases when a restaked asset has a major depeg from the underlying asset, the vault collateral may become liquidatable since the strategy will be short native asset PERP but collateralized with the restaked asset.

When the funding rate turns negative, the vault aims to automatically exit short perp and spot positions. However, if there is not enough liquidity in the perp or spot markets on Derive, exiting a negative funding environment may take longer than optimal.

Per the Derive docs, for each market, there is a set of oracle inputs used for marking assets when computing margin and liquidations. This data is posted onchain for transparency and available via the public REST API. This data is provided by Block Scholes and several other partners.

It’s possible that feeds for certain assets (particularly less liquid ones) may have marks that deviate from the true fair value, which can result in suboptimal execution for the strategy vault.

Holding the underlying collateral carries its own set of risks. These may include, but are not limited to, smart contract bugs, Ethereum bugs, restaking penalties, price fluctuations, and key management problems.

For a detailed overview of the risks specific to each type of collateral, please refer to the relevant documentation:

Transferring assets from one network to another carries risks associated with the underlying bridge provider. In this product, we use Socket as the bridge provider. Please review their documentation for more details.

Interacting with any smart contract carries the risk of losing access to your funds. The immutable nature of smart contacts makes it difficult and potentially impossible to recover them.