# VETA Risk Reserve Fund Mechanism

## VETA's Safe Vault (VSV) is an emergency reserve established by VETA in July 2023 to protect user assets. Upon its establishment, VETA pledged to utilize penalties from liquidation payments to bolster the size of the fund, providing compensation when user assets suffer losses.

### Fund Source

The primary source of VETA's risk reserve fund comes mainly from the penalties imposed during forced liquidation processes. When a forced liquidation state is triggered, such penalty amounts are automatically transferred to the risk reserve fund.

### Vault Usage

In the event of severe loss scenarios, such as liquidation or asset loss due to cyber attacks or system failures, the risk reserve fund account is used to compensate users. The system distributes compensation according to the obligor's nominal holding value and actual profit and loss. Within a specified time frame and price range, VETA will utilize the risk reserve fund to compensate users, based on the actual funds in VETA's Safe Vault, operating with due diligence. The specific compensation scheme will be published in the form of an announcement, ensuring all affected users receive fair and transparent compensation.

### Fund Management and Transparency

VETA's risk reserve fund is stored in a wallet separated from the VETA platform to safeguard these funds. At the same time, VETA periodically publishes relevant information about the risk reserve fund to ensure all users are aware of the fund's status.

### Fund Withdrawal Mechanism

When the scale of the risk reserve fund exceeds a certain proportion (for example, 5%) of the VETA platform's Total Value Locked (TVL) or Assets Under Management (AUM), a portion of the fund can be withdrawn for community development and operational management of the platform.

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