Risk Disclosures

Last updated: 28 October 2026 | Applies to: Testnet

The short version

• Testnet only. Testnet Assets have no value, so this page mostly describes the risks you would face with real money. Some, such as phishing and wallet theft, are real today.
• You can lose everything you put in. Leverage magnifies losses, and interest adds to your debt all the time.
• A liquidation can take everything left in your Account. At or below a health factor of 1.10, your Account can be liquidated, and the Protocol lets you borrow until your Account is just above that line, with no buffer in between. On the current Stellar Testnet, the liquidator repays all of your debt and takes all of your remaining collateral, not just the debt plus a fee.
• One loss can sink the whole Account. All your positions share one health factor, so a loss or failure in one market can lead to the liquidation of all of them.
• We hold powerful admin keys. Today they are single keys, not multisigs, with no active timelock. They can pause the Protocol (which also stops liquidations), upgrade its code, change rates, prices and limits, and switch off a key health check, with immediate effect.
• No external audit yet. No outside firm has audited the smart contracts.
• No safety net. There is no insurance fund or reserve, and no deposit protection or compensation scheme covers your assets.
• Lenders can be stuck or lose money. Withdrawals can be limited, and unpaid debt can become your loss.
• Others can fail. Oracles, liquidators, venues, bridges, wallets and blockchains that we do not control can fail or be exploited.
• You decide. Copilot can be wrong, nothing here is advice, and Points have no monetary value. This list is not complete.

1. About this page

This page explains the main risks of the Interface, the Protocol and our other Services. Read it with our Terms of Use, Testnet & Rewards Terms and Disclaimers. Capitalised words have the meanings given in the Terms of Use.

• Current Testnet, subject to change. Where we describe how the Protocol works, we mean the current Testnet, mostly the Stellar Testnet, which our docs cover in most detail. The Solana Testnet can work differently, and any of it can change at any time. If the docs or the Interface differ from the smart contracts, the smart contracts decide what happens on-chain.
• Not complete. New risks can appear, and risks can combine in unexpected ways. Use the Services only if you understand these risks and are willing to take them.
• Not advice. Nothing we publish, including this page and Copilot's output, is legal, financial, investment or tax advice. Decide for yourself, and consider independent advice.

2. Liquidation can take everything in your Account

2.1 Your health factor

Your Account has one health factor: the value of everything the Protocol recognises in your Account, divided by what it owes, including interest. On the current Testnet:

• Liquidation line, 1.10. At or below a health factor of 1.10, an Account with debt can be liquidated.
• Borrowing line, also 1.10. New borrowing, withdrawals and moves to venues are allowed only while your Account stays above 1.10 afterwards. On the current Stellar Testnet, the admin can switch off the live check that runs after borrowing and venue moves (see section 4).
• No buffer in the Protocol. Because the two lines are the same, you can borrow until your Account is just above 1.10, and then a small fall in prices, or a little interest, can take it to the liquidation line. Our apps add a 1.15 buffer, but that is a check in the apps, not in the Protocol: it does not apply to transactions sent to the smart contracts another way, and it can fail.

Prices, interest, fees, oracle updates, outside venues and changes to how the Protocol values assets all move your health factor, even when you do nothing. Liquidity-pool positions are valued conservatively, so your health factor can be lower than a venue's display suggests. A position that cannot be priced, or an asset that is frozen or removed from the approved list, can count as zero.

There is no grace period. We may not warn you before a liquidation, and alerts can fail or arrive late, so watch your Account yourself. The borrowing line and the app's buffer are checked only when you act. After that, a fast market can take your Account to the liquidation line within minutes.

2.2 What a liquidation costs you

On the current Stellar Testnet:

• Full, not partial. A liquidator repays all of the Account's debt at once.
• The liquidator takes all remaining collateral, including positions at outside venues, such as Blend positions and liquidity-pool tokens. What the liquidator takes is not capped at your debt plus a fixed fee or bonus, and nothing above your debt is returned to you.

On the current Solana Testnet:

• Partial, in steps. A liquidator can repay up to half of the Account's debt in one transaction. It can repay all of it if the debt is small ($100 or less) or the health factor has fallen to 1 plus the liquidation bonus or below.
• The liquidator earns a bonus from your collateral, of up to 5% depending on the asset. The bonus shrinks as the health factor falls, so a liquidation cannot turn an Account that still covers its debt into bad debt. Close to a health factor of 1, though, a liquidation can still take all, or almost all, of your collateral.

Plan on the basis that a liquidation can cost you everything in your Account. Liquidation terms can change. We will publish the mainnet terms before mainnet.

2.3 Liquidations can be late or fail

A liquidation needs a liquidator, usually an automated bot, to act, fund the repayment and get a transaction through. Anyone can be a liquidator, but no one has to act: we do not promise to run a liquidator ourselves, or that any Account will be liquidated at any particular time. Oracle failures, pauses, thin venue liquidity, congestion, fee spikes, network limits on large transactions, and bots that go offline, run out of funds or are outbid can all delay or block a liquidation.

A late or failed liquidation does not help you. Your Account can keep losing value, and lenders can be left with bad debt. Settling your own Account can also fail to clear all debt if positions cannot be unwound at the prices you expect.

3. Leverage and your Account

3.1 Leverage magnifies losses

Digital Asset prices can move sharply at any hour, assets that usually move differently can fall together, and an asset can lose all of its value. Vanna gives you credit that can exceed your deposit, secured by everything held in your Account, so a move against you is multiplied.

For example, with stablecoin debt and everything in your Account falling together: at a health factor of 1.15, the app's buffer (about 7.7x account leverage), a fall of about 4% wipes out a third of your own money and reaches the liquidation line, where a liquidation can take the rest. At 3x (a health factor of 1.50), the line is about 27% away. The more you borrow, the smaller the move it takes: just above 1.10, which the Protocol allows, almost any fall reaches the line.

• Interest never stops, so your health factor drifts down even when prices do not move.
• Hedges can fail through funding costs, prices that stop moving together, or a failure at one venue.

3.2 One Account, one health factor

Your Vanna account is a unified cross-margin account: your collateral, borrowed funds and positions all sit under one health factor.

• Upside: a gain in one position can offset a loss in another.
• Downside: a loss in one position lowers the health factor of the whole Account. A sharp loss in one market, or a failure at one venue, can lead to the liquidation of everything, including positions that were profitable or that you thought were safe.
• Venues keep their own rules. Offsetting inside Vanna does not stop an outside venue from liquidating a position you hold there (see section 9).
• Each chain is separate. Your Accounts on Solana and Stellar are separate: collateral in one does not support positions in the other.

3.3 Borrowed funds stay in your Account

Borrowed funds stay inside your Account and can move only to approved protocols. You cannot withdraw them to your wallet. You can withdraw your own funds only if your Account stays above 1.10 afterwards, so in a fast market you may need to repay debt or unwind positions first.

3.4 Multi-step actions can stop halfway

Many actions take several transactions, such as borrow, swap, then deposit at a venue, and Copilot plans can have several steps. If one step fails, your Account can be left in between, for example with borrowed funds never deployed, or a position without its hedge. Check your Account after every action.

3.5 Borrow rates and fees change

• Rates are variable. Each pool's borrow rate depends on how much of the pool is lent out (utilisation), and rises steeply as the pool fills up.
• We can change the formula. On the current Stellar Testnet, the admin can change it within a cap that allows up to 1,000% a year at full utilisation, and can switch a pool to a different rate model.
• Fees can change, such as an origination fee on new borrowing.

Higher rates make your debt grow faster and lower your health factor.

4. Admin keys: we can pause, upgrade and reconfigure the Protocol

The Protocol is not decentralised. We hold its admin keys, including the authority to upgrade its code. On the current Testnet, each is a single key, not a multisig, and no timelock is active. We, or anyone who gains control of those keys, can:

• Pause the account manager, the risk engine and the lending pools separately. On the current Stellar Testnet, pausing the account manager also blocks liquidations, though you can still repay debt and settle your own Account. Prices keep moving during a pause, so your Account can become unhealthy and be liquidated once it ends.
• Upgrade contract code, changing what the Protocol does, including the rules for your Account and the assets in it.
• Change parameters, such as rate models, fees, oracle sources, fallback prices, approved assets and venues and how they are valued, caps, limits and liquidation settings.
• Switch off a safety check. On the current Stellar Testnet, the admin can switch off the live health check that runs after borrowing and venue actions.

Because no timelock is active, changes, including upgrades, pauses and fallback prices, can take effect immediately, with no notice and no time to exit. The Stellar contracts can delay a few changes, such as approving a new venue or asset, by 24 or 48 hours, but only once their configuration is finalised, and that delay is not active today.

Admins can make mistakes, keys can be stolen or misused, and legal orders, such as sanctions requirements, can force us to act. We aim to use these powers in users' interest, but they can still cause you losses.

5. Smart contracts are not yet externally audited

• No external audit yet. No outside firm has audited the Protocol's smart contracts. We have completed an internal security review of the Testnet contracts and an economic risk assessment, including Monte Carlo stress tests of liquidation thresholds, but neither replaces an external audit. External audits are planned, and we will publish the reports on our Security page. There is no bug bounty yet; we plan one for mainnet.
• Bugs happen. A bug or design flaw in our contracts, in a venue's contracts or in how they interact can be exploited to take some or all assets in the Protocol, including yours. Audited protocols are exploited too.
• New technology. Vanna's mix of smart-contract accounts, cross-venue credit and AI agents has not been tested through a full market cycle with real money.

Please report vulnerabilities as described on our Security page.

6. No insurance or deposit protection

• Not a bank deposit. Digital Assets in your wallet, your Account or a lending pool are not bank deposits, and we are not a bank.
• No compensation scheme. No deposit or investor compensation scheme covers them, such as the UK Financial Services Compensation Scheme (FSCS) or EU deposit guarantee and investor compensation schemes.
• No insurance. We do not insure your assets or keep an insurance fund or reserve for bad debt, and we do not promise to make good any loss, including one caused by a hack or a bug.

7. Risks for lenders (Earn)

When you supply assets to a lending pool, you receive pool shares and your assets are lent to borrowers.

• Yield varies with utilisation and with borrowers paying interest, and can fall close to zero.
• You may not be able to withdraw. You can withdraw only assets that are not lent out, so when utilisation is high you may have to wait for borrowers to repay or new lenders to arrive. On the current Stellar Testnet:
• one withdrawal is limited to the smallest of what you request, 50% of the pool's total assets and the cash available;
• a larger request can complete only in part, and the rest is not queued;
• new borrowing stops at 95% utilisation, but utilisation can rise above that as interest accrues or lenders withdraw.
• Pauses. On the current Stellar Testnet, a pool pause blocks deposits, withdrawals and new borrowing, but not repayments.
• Bad debt. A borrower's Account can lose value faster than it can be liquidated, for example in a crash, after an oracle delay or failed liquidation, or after an exploit at a venue holding borrowed funds. No insurance fund or reserve covers the unpaid debt, so lenders in that pool bear it. On the current Solana Testnet only, bad debt in an Account with $1 or less of collateral left can first be written off against the pool's unclaimed protocol fees, and anything those fees do not cover falls on the pool's lenders.
• Totals are not cash. Displayed pool totals include outstanding loans, even ones that may never be repaid, so your pool shares can show more than you can actually withdraw.

8. Oracles

The Protocol values collateral, positions and debt using third-party price feeds (oracles): today, Kamino Scope on Solana, with Pyth as a fallback, and Reflector on Stellar.

• Bad prices cause bad outcomes. A wrong, manipulated, delayed or missing price can cause a liquidation that should not happen, block one that should, or let Accounts fall below their debt.
• Spot prices, up to 10 minutes old. On the current Stellar Testnet, the Protocol uses Reflector's latest spot price, not an average, and refuses a price more than 10 minutes old. Nothing smooths out a brief spike or drop, which can trigger a liquidation, and a price that is several minutes old can differ from where the asset trades now.
• Fallback prices come from us. On the current Stellar Testnet, if a feed has no fresh price, the Protocol can use a fallback price that the admin set within the last 24 hours. It may differ from where the asset actually trades.
• No usable price, no action. Transactions that need a price fail without one, which can stop you borrowing or withdrawing and can block liquidations.
• Venue positions use venue data, such as exchange rates and pool reserves. If that data is wrong or late, so is your health factor.

9. Third-Party Services and venues

Vanna connects to Third-Party Services that we do not control. On the current Testnet, the venues named in the product are Kamino (lending and vaults), Jupiter (swap routing) and Phoenix (trading, including perpetual futures) on Solana, and Blend (lending), Soroswap and Aquarius (swaps and liquidity pools) on Stellar.

• Each venue has its own rules, fees, contracts, admin keys and oracles, and can liquidate a position you hold there even while your Vanna health factor looks fine.
• Venues can change or fail. A venue can pause, change its rules, restrict withdrawals, freeze pools, delist an asset or be exploited. Your position there can then lose value, which lowers your health factor at once and can lead to the liquidation of your whole Account.
• Integrations can break. If our integration misreads a venue or breaks after a venue upgrade, a position can become untracked, valued at zero or stuck for a time.
• Approval is not endorsement. We approve venues so the Protocol can work with them, not to vouch for their safety, solvency or conduct.
• Other services. We also rely on wallets, our sign-in provider (Dynamic), blockchain nodes, indexers, cloud hosting and Copilot's AI model. If one fails, parts of the Services can stop working.

10. Product risks

Features differ by chain and by country, and we can add, change or remove them at any time. Some are switched off in some countries; see Restricted Jurisdictions.

10.1 Spot and MEV

• The price you get. Swaps face slippage and price impact, quotes expire, and the price you get can differ from the one shown, especially in thin markets, such as most test markets.
• Others can trade around you. Pending transactions can be seen and reordered, so others can trade ahead of you or sandwich your trade. This is called MEV (maximal extractable value). Both Solana and Stellar are exposed, and we do not promise any MEV protection.

10.2 Perps

Perps are available on the Solana Testnet through Phoenix perpetual futures markets, and on Stellar where available.

• Leverage on leverage. You can borrow through your Account and then add leverage at the venue, so losses compound.
• Funding payments are charged regularly, can be large, can switch direction and are due even when the price does not move.
• Venue liquidation. The venue can liquidate your position at its own margin level and mark price, which can differ from the price Vanna uses.
• Auto-deleveraging. A venue that cannot cover losses from liquidated traders may close profitable positions, including yours, at prices you did not choose, or share the losses among traders.
• Market changes and local limits. Venues can halt trading, cut leverage or delist markets. Crypto derivatives are banned or restricted for retail users in some countries; see Restricted Jurisdictions.

10.3 Predict

• All or nothing. Each outcome pays in full or pays nothing, so you can lose your whole stake.
• Resolution risk. A result can be disputed, delayed, cancelled or decided in a way you think is wrong.
• Illiquidity. You may be unable to sell before resolution, or only at a large discount, and prices can jump on news.
• Effect on your Account. The value used for your health factor can differ from what you could sell for, and it can drop to zero at resolution, which can trigger a liquidation. Until then your capital is locked while borrow interest keeps accruing.

10.4 Farm and vault strategies

• Strategies can lose money or change how they work, and their managers have their own admin powers.
• Exits can be slow. Lock-ups, cooldowns, queues or caps can delay withdrawals, so you may not exit in time to avoid a liquidation.
• Pool losses and depegs. Liquidity-pool positions can suffer impermanent loss, reward tokens can lose value, and staked or yield-bearing tokens can trade below their intended value.
• Negative carry. If the borrow rate rises above the strategy's yield, you lose money every day, and leverage magnifies the loss.

10.5 Tokenized stocks (Solana), where available

• Not shares. Tokenized stocks are third-party tokens that aim to track a share price. They usually carry no shareholder rights, and their value depends on the issuer, its custodian and its legal structure. Issuers can freeze balances or limit redemptions, and the tokens may be treated as securities and restricted where you live.
• Prices can diverge from the share price, especially outside market hours, when price feeds may pause or go stale. A price gap when markets reopen can push your Account to liquidation before you can react.

11. Bridges and stablecoins

• We do not run a bridge. The Funds module can connect you to third-party bridges, such as Circle's Cross-Chain Transfer Protocol (CCTP). Bridges have been among the most exploited parts of crypto. If Circle pauses or delays a CCTP transfer, your funds can be stuck in transit, and other bridges can be exploited, delayed or run out of liquidity. Sending to the wrong chain or address can mean a permanent loss. Do not bridge real assets hoping to use them on the Testnet.
• Stablecoins can depeg, briefly or for good, through problems at the issuer, its reserves or its banks, regulatory action or panic. Your health factor moves with a depeg, whether the stablecoin is your collateral or your debt. Issuers such as Circle can also freeze stablecoins at an address, and Stellar asset issuers can authorise, freeze or claw back balances.
• Look-alike test USDC. On the current Stellar Testnet, each venue has its own test USDC. They are not interchangeable, but the Protocol values them all with one USDC price feed, so a loss of value in one version might not show in your health factor at once. Check that you use the version you intend.

12. Blockchain risks

• All chains. Blockchains can suffer congestion, fee spikes, outages, forks and censorship, and the blockchain nodes (RPC providers) the Interface uses can fail or return wrong data.
• Solana. Solana has had network-wide outages, some lasting hours. During one, no one can add collateral, repay or close positions, and liquidations can follow straight after the restart. When the network is busy, transactions can be dropped or delayed.
• Stellar and Soroban. Stellar's consensus is designed to halt rather than risk an inconsistent ledger. Soroban, Stellar's smart-contract platform, limits how much work one transaction can do, so complex transactions, such as liquidating an Account with many positions, can fail.

13. Wallets, keys and signing

• We cannot recover your wallet. We do not hold your private keys, so we cannot recover your wallet or restore your access, and blockchain transactions generally cannot be reversed.
• Embedded wallets depend on a provider. If you sign in by email, your embedded wallet comes from Dynamic, a third-party provider. If it fails, changes its service or stops working with us, you may lose access through the Interface for a time. Learn early how to export or recover your wallet. Anyone who controls your sign-in email may be able to use the wallet, so secure that email with strong two-factor authentication.
• External wallets. With an external wallet, such as Phantom, Solflare, Backpack, Freighter or LOBSTR, you alone hold your seed phrase. Buggy wallet software, malicious extensions and malware can lose or steal assets.
• Read before you sign. Do not sign what you do not understand, and revoke token approvals you no longer need: a malicious contract can use them to take your assets later.
• Delegated signing. If you let an app, an AI agent or a session key sign for you, it can act within that permission without asking you each time, and its mistakes can cost you money. Grant the narrowest permission you can.
• Phishing. Watch for fake websites, apps, social accounts, "support" agents and airdrops. Our team will never ask for your seed phrase, private key or sign-in code. Vanna has no token, so treat any "Vanna token" sale or Vanna airdrop as a scam.
• Use a separate wallet for testing. A malicious transaction signed with a wallet that also holds real assets can drain them. Never send real assets to a Testnet address or contract.

14. Copilot and AI agents

14.1 Copilot

• Copilot is AI. When you use Copilot, you are dealing with an AI system, not a person. Its replies and plans come from a third-party AI model, currently Google Gemini, working with our software.
• Where it is offered. Copilot is not available in the European Economic Area, the UK or Switzerland. Elsewhere, access is gated.
• It can be wrong. Output can be inaccurate, out of date or made up. Copilot can misread the asset, version, amount or chain you mean, use stale prices, or propose plans that work technically but are poor choices.
• How plans run. Copilot proposes plans and is designed to re-check your health factor against a minimum level before a plan runs. By default you approve every transaction in your wallet. If you grant Copilot a delegated signing permission, it can sign without asking you each time, but only within the limits you set. A sound plan can turn harmful seconds later, the checks can fail, and a plan may not fully execute, so check the result. The minimum level does not protect you from a venue liquidating your position, or from a depeg.
• Outages and changes. Copilot can be slow or unavailable exactly when markets move, so do not rely on it to manage your risk. We can change, limit or withdraw it at any time.
• Manipulation. Text in web pages, token names or venue data can hide instructions meant to steer an AI (prompt injection).
• Your data. What you type goes to us and the model provider, so do not include secrets or personal data. See our Privacy Policy.

14.2 MCP access for AI agents

Our MCP server lets your own AI agents read data and prepare or submit transactions, depending on the access you give them. Access is gated, and the server can change, go down or be suspended.

• Agents make mistakes fast. They can misread data, make things up or be hijacked by prompt injection, and errors, such as a transaction repeated in a loop, can pile up and cost you money before you notice.
• Lock down access. Protect API and session keys, grant the narrowest permissions you can, set spending and position limits, and revoke access you no longer use.

15. Interface risks

• It can fail. The Interface can be unavailable, slow or buggy.
• Figures are estimates. Health factor, liquidation price, rates, yields and profit and loss can lag or differ from on-chain state. The smart contracts decide what actually happens.
• Fake versions. Attackers can hijack a domain, hosting account or third-party script to serve a fake Interface that asks you to sign harmful transactions. This has happened to other DeFi protocols.
• Check where you are. Our official domains are vanna.finance, docs.vanna.finance and test.vanna.finance; the Testnet apps currently run at test.solana.vanna.finance and test.stellar.vanna.finance. Bookmark them, and avoid links from ads, direct messages and search results.

16. Testnet-specific risks

• No value. Testnet Assets have no value, cannot be exchanged for money and promise nothing at mainnet.
• Resets. We can reset or delete balances, Accounts, positions and history at any time, without notice. The Solana and Stellar test networks are also reset from time to time.
• Unrealistic conditions. Expect bugs, outages and missing features. Test liquidity is thin and artificial, test tokens may not track the assets they imitate, and Testnet results do not predict mainnet results.
• Things change. Features, chains and venues can change or be removed, and mainnet may launch with different features, or not at all.
• Activity is public. Testnet transactions are recorded on public blockchains.

Testnet rewards are covered in the Testnet & Rewards Terms.

17. Legal, regulatory and tax risks

• The law is unsettled. Rules on DeFi, crypto lending, derivatives, prediction markets, tokenized securities and AI are changing, and could restrict the Services where you live or force us to change or close features, possibly without notice.
• Enforcement happens. Regulators have acted against operators of DeFi interfaces, including for offering leveraged derivatives to retail users. Action against us or a venue could disrupt the Services.
• Where you live matters. Some features may not be available in your country. US Persons may not use the Services, and our Restricted Jurisdictions page lists the other places and persons excluded. Getting around these limits, for example with a VPN, is prohibited.
• Blocks and freezes. We can limit or end access to the Interface and block wallet addresses linked to sanctioned persons or illicit activity, and stablecoin issuers and venues can freeze assets.
• Tax. Swaps, liquidations, rewards and other activity can have tax consequences, which vary by country and are your responsibility.

18. Points have no value

• No monetary value. Points record Testnet activity. They are not a token, cannot be bought, sold or transferred, and give no right to any token, payment or reward. The formula is not published, and we can change it or adjust, reset or remove Points.
• Beware offers. Anyone offering to buy or sell Points is not us.
• Do not chase Points by taking risks you would not otherwise take.

The full rules are in the Testnet & Rewards Terms.

19. Questions

Email hello@vanna.finance. For a security issue, put "Security" in the subject line and follow our Security page.