Is infiniFi Safe?
Risk Grade: C+ (37/100)
infiniFi is rated as elevated risk — multiple novel mechanisms and notable interaction risks.
Elevated risk — on-chain fractional reserve leverage and concentrated Ethena dependency, partially offset by transparent reserves and audited immutable contracts.
infiniFi is a yield protocol on Ethereum that replicates fractional reserve banking on-chain, deploying deposits across Aave, Ethena, and Pendle to generate yield. Users can choose between liquid staking (siUSD) or locked higher-yield positions (liUSD). With $176M TVL and transparent on-chain reserves, it offers yields above typical money markets. Its C+ grade reflects the inherent risk of fractional reserve leverage and concentrated strategy dependency.
TVL
$176M
Mechanisms
6
Interactions
5
Value Grade
D
Key Risks for infiniFi Users
infiniFi operates as an on-chain fractional reserve, deploying more capital into yield strategies than it holds in deposits (~$1.60 per $1 deposited). This amplifies returns but also amplifies losses if underlying strategies fail.
A transparent loss waterfall determines who absorbs losses first: locked liUSD holders, then staked siUSD holders, then plain iUSD holders. Higher-yield options carry genuine principal risk, not just yield reduction.
Heavy reliance on Ethena USDe for yield generation creates concentrated counterparty risk. If Ethena experiences issues, infiniFi's returns and reserve adequacy would be directly impacted.
Top Risk Factors
- •infiniFi operates as on-chain fractional reserve banking, allocating ~$1.60 to yield strategies per $1 deposited. This leverage amplifies returns but also losses. If underlying strategies (Aave, Ethena, Pendle) experience simultaneous losses, the reserve may be insufficient to honor all iUSD redemptions at par.
- •The loss waterfall mechanism explicitly prioritizes which depositors absorb losses first: locked liUSD holders absorb first, then siUSD stakers, then plain iUSD holders. While transparent, this means higher-yield products carry genuine loss-of-principal risk, not just yield reduction.
- •Heavy reliance on Ethena's USDe for yield generation creates concentrated counterparty risk. If Ethena experiences a depeg or yield compression, infiniFi's returns and potentially its reserve adequacy would be directly impacted.
Risk Score Breakdown
infiniFi's highest risk area is Scale Exposure (5/10). Here's how each dimension contributes to the overall 37/100 score:
Read the Full infiniFi Risk Report
This protocol has 2 collapse scenarios. 3 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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