Loss of principal in case of payouts
The reserve deposits (USDC, guarantor token, TIDAL token) will be used to compensate losses incurred by cover purchasers in case of a hack event in the respective covered protocol. Such payouts might use up a fraction to 100% of your deposits. Tidal makes no representation on the security of the protocols it offers to be insured. Cover providers must do their own due diligence and understand the risks associated with covering protocols they chose to provide cover for.
Tidal codebase and its hack risks
Tidal’s code has been audited by Peckshield and Halborn. The reports can be found here. The platform has also been under testing since the past 2 months. We treat security as the top priority. Despite these precautions, please beware that security audits don’t completely eliminate the risk of any form of hacks, security attacks, economic exploits, errors, failures or bugs on the Tidal protocol which might lead to loss of your deposits. The code, protocol and interfaces are provided on a best effort basis and Tidal takes no responsibility to guarantee its security or make refunds in case of losses due to use of the product.
All statements contained herein may constitute forward-looking statements (including statements regarding the intent, belief or current expectations with respect to level of rewards, market conditions, business strategy and plans, risk management practices). You are cautioned not to place undue reliance on these forward-looking statements given that these statements involve known and unknown risks, uncertainties and other factors that may cause the actual future results to be materially different from that described by such forward-looking statements, and no independent third party has reviewed the reasonableness of any such statements or assumptions. These forward-looking statements are applicable only as of the date which this document is published, and Tidal expressly disclaims any responsibility (whether express or implied) to release any revisions to these forward-looking statements to reflect events after such date.
Tidal is not able to guarantee any specific APR or performance for participation in the Cover Mining Program. The value of rewards received by participants varies on many factors which are not within the control of Tidal or any party. In particular, the secondary market price for TIDAL tokens or any digital assets deposited may fluctuate unpredictably and unfavorably, and Tidal does not provide any guarantee or assurance as to the secondary market price of such TIDAL tokens.
Risks arising from stablecoins
Digital assets used for participation in the Cover Mining Program may include various “stablecoins” such as USDC. These stablecoins are designed to hold on to a specific value by pegging it to fiat currencies (such as the US dollar). These stablecoins require trust in the centralised entity issuing said stablecoins, and are therefore vulnerable to loss of peg and destabilisation from internal control/management issues as well as external geopolitical factors. Participants may suffer losses in the event of such loss of peg.
The tax characterisation of TIDAL tokens and the rewards for the Tidal Cover Mining Program is uncertain. It is possible that a participant’s intended treatment of TIDAL tokens and the rewards from the Tidal Cover Mining Program may be challenged. The participant must seek its own tax advice in connection with TIDAL tokens and participating in the Tidal Cover Mining Program, which may result in adverse tax consequences to the participant, including, without limitation, withholding taxes, transfer taxes, value added taxes, income taxes and similar taxes, levies, duties or other charges and tax reporting requirements.
Risks Associated with Uncertain Regulations and Enforcement Actions
The regulatory status of TIDAL tokens, the Tidal Cover Mining Program and distributed ledger technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether regulatory agencies may apply existing regulation with respect to such technology and its applications, including TIDAL tokens and the Tidal Cover Mining Program. It is likewise difficult to predict how or whether legislatures or regulatory agencies may implement changes to law and regulation affecting distributed ledger technology and its applications, including TIDAL tokens and the Tidal Cover Mining Program. Regulatory actions could negatively impact TIDAL tokens and the Tidal Cover Mining Program in various ways, including, for purposes of illustration only, through a determination that TIDAL tokens or the Tidal Cover Mining Program are a regulated financial instrument or insurance scheme that require registration or licensing. The Tidal Cover Mining Program may be required to immediately cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction.
Source of funds
Tidal is a permissionless protocol on Ethereum. As a result, anyone is allowed to participate in the cover mining program. While we restrict users from the US and sanctioned jurisdictions from accessing the user interfaces hosted by us, users might still access the protocol directly via alternate interfaces. Consequently, we are unable to guarantee the origin of funds deposited in Tidal’s reserve pools. Cover purchasers should recognize that such funds could be used in case of payouts and Tidal makes no representation in guaranteeing whether the funds used to back the reserve pool were obtained from legitimate sources. Users agree to indemnify Tidal in case of any issues or losses that arise as a result of such transactions.