Elevated risk — on-chain fractional reserve leverage and concentrated Ethena dependency, partially offset by transparent reserves and audited immutable contracts.
Top Risks
1
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.
2
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.
3
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 Breakdown
Frequently Asked Questions
Is infiniFi safe to use?
infiniFi receives a C+ risk grade (37/100) from Hindenrank, where lower scores indicate lower risk. 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.
What are the main risks of using infiniFi?
The key risks identified for infiniFi are: (1) 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. (2) 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. (3) 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.
What is infiniFi's risk score breakdown?
infiniFi scores 37/100 across eight risk dimensions: Mechanism Novelty: 6/15, Interaction Severity: 8/20, Oracle Surface: 2/10, Documentation Gaps: 4/10, Track Record: 6/15, Scale Exposure: 5/10, Regulatory Risk: 3/10, Vitality Risk: 3/10. The highest risk area is Scale Exposure at 5/10.
How does infiniFi compare to other Yield protocols?
Among 112 rated Yield protocols on Hindenrank, infiniFi ranks #59 by safety (lowest risk score = safest). Its 37/100 risk score and C+ grade place it in the middle tier of Yield protocols.
Has infiniFi ever been hacked or exploited?
infiniFi scores 6/15 on the Track Record risk dimension, indicating some history of security incidents or exploits. Higher scores reflect more severe or frequent incidents. Review the full risk report for details.