> For the complete documentation index, see [llms.txt](https://cicada-finance.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cicada-finance.gitbook.io/docs/faq/how-does-cicada-finance-mitigate-liquidity-fluctuations-and-asset-risks.md).

# How does CICADA Finance mitigate liquidity fluctuations and asset risks?

CICADA Finance employs multi-layered verification mechanisms, including on-chain audits, oracle validations, and traditional financial reporting, to ensure yield transparency and traceability. For CeDeFi assets, yield verifiability and auditing are categorized into three types:

* On-chain Native Assets (Protocol Yield): Fully on-chain and transparent; audited directly via blockchain explorers for complete traceability; advantages include real-time data access and clear audit trails.
* Centralized Strategy Assets: Involve centralized institutions' crypto trading strategies; challenges include potential black-box operations, reporting lags, and information asymmetry. Audited by professional crypto auditors using traditional due diligence processes, with periodic reports issued.

Real-World Assets (RWAs): Three-stage audit process: (1) Traditional offline audits for asset compliance due diligence; (2) On-chain validation via oracles/verification nodes to ensure off-chain/on-chain mapping authenticity; (3) On-chain audits for blockchain-specific features. This adds complexity due to the asset mapping verification layer.