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

# Smart Contract Risks

> Code security and audit status

**Understanding smart contract risks and how TED Protocol mitigates them**

Smart contracts are immutable code deployed on blockchains. While they enable trustless operations, they carry inherent risks.

***

### Risk Types

#### Code Vulnerabilities

Bugs or logic errors could lead to loss of funds.

* **Types**: Reentrancy attacks, integer overflow, access control failures, logic errors
* **Mitigations**:
  * Multiple independent audits
  * Battle-tested OpenZeppelin libraries
  * Extensive testing (unit, integration, fuzzing)
  * Active bug bounty program

#### Upgrade Risks

Upgradeable contracts could theoretically introduce vulnerabilities.

* **Mitigations**:
  * Diamond Pattern (EIP-2535) for modular upgrades
  * 48-hour timelock delay
  * 3-of-5 multi-sig approval required
  * Full transparency in upgrade history

#### Dependency Risks

Vulnerabilities in integrated external protocols could affect us.

| Dependency    | Risk Level | Notes                                           |
| ------------- | ---------- | ----------------------------------------------- |
| Curve Finance | Low        | Billions in TVL, multiple audits                |
| Uniswap V3    | Low        | Billions in TVL, multiple audits                |
| Circle CCTP   | Low        | Institutional-grade                             |
| LayerZero     | Low        | \$10B+ secured                                  |
| Wormhole      | Medium     | Recovered from 2022 incident, improved security |

#### Oracle Risks

Price oracle manipulation could occur.

* **Mitigations**:
  * Stablecoin focus minimizes oracle dependency
  * DEX spot prices instead of external oracles
  * TWAP protection where applicable
  * Slippage limits as final safeguard

***

### Security Measures

#### Audit Status

* **Primary Audits**: Core contracts and bridge integrations scheduled
* **Automated Scanning**: Continuously active
* **Report Publication**: Will be published when available

#### Security Patterns

* **Reentrancy Protection**: Locks during execution
* **Access Control**: Role-based
* **Pausability**: For emergency response
* **Implementation Standard**: OpenZeppelin's well-established implementations

#### Emergency Controls

| Action               | Required Approval |
| -------------------- | ----------------- |
| Pause                | 2-of-5 multi-sig  |
| Unpause              | 3-of-5 multi-sig  |
| Upgrade              | 3-of-5 + timelock |
| Emergency Withdrawal | 4-of-5 multi-sig  |

***

### Contract Architecture

TED Protocol uses the **Diamond Pattern (EIP-2535)**.

#### Structure

* **DiamondProxy**: Single entry point
* **FXSwapFacet**: Swap logic
* **DEX Adapters**: Curve, Uniswap V3/V4, PancakeSwap, DragonSwap
* **Bridge Facets**: CCTP, LayerZero, Wormhole
* **AdminFacet**: Governance

#### Benefits

* Single entry point reduces attack surface
* Modular upgrades (changing one facet doesn't affect others)
* Improved gas efficiency
* No contract size limits

#### Storage Safety

All facets share diamond storage using unique storage positions, preventing storage collision issues that have affected other upgradeable contracts.

***

### Testing

| Type              | Target Coverage       |
| ----------------- | --------------------- |
| Unit Tests        | 95%+                  |
| Integration Tests | 80%+                  |
| Fuzz Tests        | All critical paths    |
| Invariant Tests   | Core accounting logic |
| Fork Tests        | Against mainnet state |

***

### Bug Bounty

| Severity | Reward          |
| -------- | --------------- |
| Critical | Up to \$100,000 |
| High     | \$25,000        |
| Medium   | \$5,000         |
| Low      | \$1,000         |

**In Scope:**

* Smart contracts on all supported chains
* Bridge integrations
* TEDP token contracts

**Out of Scope:** Frontend issues, third-party services

**Report:** [security@tedprotocol.io](mailto:security@tedprotocol.io)

***

### User Protections

#### Transaction Safeguards

* **Slippage Limits**: Revert if output falls below minimum
* **Deadlines**: Revert transactions that are too old
* **Validation**: Amount and address validation prevents common errors

#### If Something Goes Wrong

| Situation             | Response                                   |
| --------------------- | ------------------------------------------ |
| Swap fails            | Full refund minus gas                      |
| Bridge transfer stuck | Manual retry available                     |
| Contracts paused      | Withdrawals still work                     |
| Exploit detected      | Emergency pause + fund recovery procedures |