Edge Cases and Failure Modes

Mass Redemption (Bank-Run Behavior)

Scenario: a large share of investors attempt exits via redeemRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain. in a short time window.

Expected behavior:

• Each exit uses the same conversion mechanics for that position.
• Wrapper and strategy liquidity governs immediate execution capacity.
• Circuit breaker can throttle outflow velocity.
• Processing may stretch over time if upstream liquidity is constrained.

Mass redemptionRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain. is not a death spiral. Each redemptionRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain. is self-balancing. The last person to redeemRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain. gets the same rate as the first.

The goal is to prevent first-movers from extracting at others’ expense, everyone gets the same rate, and outflow limits spread exits over time.

Yield Strategy Failure

Scenario: strategy-layer exploit or severe loss event.

The core behavior is covered in Risk Model — Smart-contract exploit. The key behavioral nuance here: circuit breakerCircuit BreakerVelocity control on outflows that limits how fast capital can leave through wrapper withdraw paths. Uses a dual-buffer model to protect against exploit-velocity drains while ensuring exits remain available over time. may activate to throttle outflows and prevent front-running during the initial discovery window, spreading exits over time rather than rewarding the fastest responders.

Oracle Outage

The base scenario and impact are described in Risk Model — Oracle Outage. The nuances for this edge case:

• Impact on raise completion timelines: A prolonged outage pauses all new depositsDepositThe action of investing collateral into a raise. Collateral is received by the raise contract, routed to the yield strategy, and a pFT position NFT is minted. At deposit time, a live oracle price feed determines USD notional for FT allocation via deposit-time conversion., which can delay a raise from reaching its cap. Existing positions and exits are unaffected.

Project Abandonment

Scenario: project team becomes inactive.

The base scenario and recovery path are described in Risk Model — Project Abandonment. The nuance for this edge case: while exit rights and yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. claiming are fully permissionless, admin-gated operations like buybackBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. execution will stall if no operator acts. YieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. continues to accrue passively in the strategy, but nobody routes it to buyback/burnBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. until a new operator steps in.

Rounding and Dust

Scenario: integer division leaves residual dust.

Expected behavior:

• Rounding always favors the protocol (reserveReserveThe pool of collateral backing investor positions in a raise. In normal operation, each investor's proportional share equals their original deposit. In a shortfall, proportional settlement ensures fair distribution. Reserve accounting is per-raise (isolated).), never the user. The amounts are negligible (wei-level).
• Small residual balances can remain until final cleanup/sweep operations.