> For the complete documentation index, see [llms.txt](https://docs.adcpcapital.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.adcpcapital.com/protocol/risk-and-solvency.md). # Risk and Solvency **Solvency has priority over distributions, growth, or any commercial objective.** When solvency or liquidity conditions are violated, distributions, discretionary allocations, and credit expansion stop before anything else happens. ## Oracle health See [Credit and Collateral](/protocol/credit-and-collateral.md) for the four oracle-health states (`VALID`, `STALE`, `UNAVAILABLE`, `DEVIATING`) and exactly which protocol actions each one blocks. An unhealthy oracle state is a distinct concept from a borrower position's own health factor — one describes the trustworthiness of a price feed, the other a position's own safety margin. ## Protocol-wide operating mode The protocol is designed around a small set of operating modes governing what actions are permitted at a given time (normal operation, a caution state, a recovery state, and an emergency state). Exact thresholds for moving between these modes are calibrated per deployment and are not published here as universal constants — see [Deployment Reference](/network/deployment-reference.md) for where the current pilot's actual configuration is recorded. ## Emergency authority An emergency-guardian role exists specifically to **reduce** risk — it can pause borrowing/issuance or disable a compromised collateral type or a failed oracle. It is constitutionally barred from confiscating assets, minting new residual supply, reordering seniority, erasing liabilities, or increasing risk in any way. See [Authority Model](/protocol/authority-model.md) for the full human/protocol authority boundary. ## Liquidation safety Liquidation is deliberately conservative under oracle uncertainty: an `UNAVAILABLE` oracle state blocks liquidation outright in the current pilot's configuration, rather than allowing a liquidation to proceed against an untrustworthy or absent price. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.adcpcapital.com/protocol/risk-and-solvency.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.