Risk Classification System
TrustedStake employs a risk classification system to help investors understand the risk profile of each index strategy. Our classifications go beyond simple volatility measures to provide nuanced risk assessment.
Risk Classification Labels
Risk On Strategies: Risk On indexes involve direct investment of your TAO principal into subnet tokens (alpha) based on the selected strategy. These strategies offer higher return potential but involve direct exposure to subnet performance volatility.
Characteristics:
• Direct TAO-to-alpha conversion based on index constituents
• Principal at risk based on subnet performance
• Higher return potential with corresponding risk
Risk Averse Strategies: Risk Averse indexes utilize only the "risk-free" root yield that TAO holders earn staking to root, automatically reinvesting these rewards into index constituents. Your principal TAO remains completely safe while still gaining exposure to subnet performance.
Characteristics:
• Principal TAO remains completely safe and untouched
• Only “risk-free” root yield is invested into subnet constituents
• Optimized root dividend reinvestment into top subnets
• Low return potential but with principal protection
How It Works:
Your TAO generates risk-free root yield
This yield is automatically captured and reinvested into index constituents
Your original TAO principal remains completely safe
You gain exposure to subnet performance without risking principal
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