> For the complete documentation index, see [llms.txt](https://docs.riskprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.riskprotocol.io/protocol-design-and-specifications/smart-tokens/primary-attributes.md).

# Primary Attributes

SMART Tokens are defined by the primary attributes listed below. Please refer to [*Product Specifications*](/protocol-design-and-specifications/product-specifications.md) for a detailed description of the various types of SMART Tokens:

1. **Intuitive Risk Profiles:** Each SMART token offers a pre-packaged risk/return profile or payoff (e.g., "RiskON", “Low VOL”, or "10x BULL") that investors can choose based on their risk appetite. This spares users from needing to understand or manage complex options themselves—the complexity is fully abstracted away. Buying a RiskOFF token is as simple as purchasing any ERC-20 token, yet it implicitly means you hold a protected, lower-volatility exposure to the underlying. SMART Tokens effectively allow crypto users to focus on *outcomes, not mechanics*.
2. **Price Discovery & Liquidity**: It has been our observation that, while most DeFi projects tout lego-like composability, this is not the case in practice. The reason is quite simple. True composability requires price discovery and liquidity in order to make such tokens practically usable. Our design incorporates both these elements: 
   1. We facilitate price discovery by publishing a second-by-second Net Token Value ("NTV") for all our SMART Tokens and, 
   2. We’ve created an AMM liquidity marketplace for the SMART Tokens.
3. **Fully collateralized, No Liquidations**: Every SMART token pair is 100% backed by collateral (the initial deposit asset). There are no borrowed funds, so margin calls and liquidation events never occur. Even in extreme market moves, the RiskOFF put is always made whole, while the RiskON token can go to near zero but never negative.<sup>\[1]</sup>
4. **Highly Configurable Risk Profiles:** The SMART tokens are highly configurable, and we can create an endless range of risk payoffs by varying key parameters such as option strategy, strike levels, and duration. In addition:
   1. The collateral can be an underlying cryptocurrency or a stablecoin.
   2. The synthetic options can be based on a reference asset that is different from the collateral asset.
5. **On-Demand Creation & Redemption**: SMART tokens are always created in pairs. If a user deposits 1 BTC, they will receive 1 RiskON BTC and 1 RiskOFF BTC. Similarly, they can only be redeemed in pairs. In the example used above, if the user wants to redeem his/her collateral of 1 BTC, they will have to burn 1 RiskON BTC and 1 RiskOFF BTC. SMART tokens can be minted at any time by interacting with TRP's permissionless smart contracts, and the collateral can also be redeemed at any time, subject to the requirement mentioned in this paragraph.
6. **Tethered Value:** Each SMART token pair is designed to have an aggregate value equal to the underlying collateral. Arbitrage opportunities are created when that is not the case.
7. **Synthetic Options**: The SMART tokens owe their risk profile to embedded synthetic options that represent a claim on the underlying collateral. The options embedded in the SMART tokens are not purchased on any exchange or OTC desk; instead, they are synthetically created by TRP by having the two SMART tokens in a SMART token pair serve as counterparties to each other.

***

<sup>*\[1] In the event that the barrier in the down-and-out put is hit, RiskON will transfer its share of the underlying collateral to RiskOFF and go to near zero. The current epoch will end, and a new one will commence immediately, with RiskON and RiskOFF set to equal values again.*</sup>


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