> For the complete documentation index, see [llms.txt](https://docs.elara.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.elara.fi/start-here/what-elara-isnt.md).

# What Elara Isn't

**Not a stablecoin protocol.** ELUSD is a managed treasury asset, not a regulated payment instrument, and not backed by cash sitting in a bank vault.

**Not a yield farm.** There are no token emissions propping up APY. No recursive loops, no liquidity mining. Yield is sourced from trading activity and liquidity provision in real markets.

**Not risk-free.** There is no government backstop and no deposit insurance. All positions are denominated in stablecoins and carry no directional market exposure, but that is not the same as no risk. The largest single exposure is the collateral basket itself: issuer and depeg risk across USDC, USDT and USDe. USDe in particular is a synthetic dollar rather than a fiat-backed one and carries a different risk profile. Beyond that, the strategies involve execution risk, smart contract risk and counterparty risk. Returns are a function of market conditions and execution quality.

**Not backstopped.** There is no reserve fund and no junior tranche. Strategy and NAV losses are borne by sELUSD holders. Holders of unstaked ELUSD are not exposed to NAV movement, but they are also not earning. Nobody sits behind sELUSD absorbing losses first.