Risks

Risks to Lenders (USD3 / sUSD3)

Smart-contract risk: Bugs, oracle failures, or economic exploits. Mitigations: third-party audits, formal-verification of rate math, circuit breakers.
Credit default risk. Borrowers fail to repay principal or interest. Mitigations: 3CA underwriting, junior first-loss tranche (sUSD3), dynamic DRP pricing, monthly model refresh, external collections via Credit Slasher.
Liquidity risk. Redemption requests exceed the cash buffer. Mitigations: idle capital parked in Aave for instant withdrawal, utilization-linked base rate, redemption queue with time-based throttling.
Oracle & rate-feed risk Manipulated price or SOFR feeds distort LTVs and rates. Mitigations: redundant Chainlink feeds, internal TWAP guards, emergency “pause & price-lock” switch.
Governance / upgrade risk. Malicious or negligent parameter changes. Mitigations: multisig with time-lock, published upgrade roadmap, veto window for USD3 governance token holders (road-map).

Privacy & data-leak risk. Exposure of KYC, bank, or bureau data. Mitigations: minimal viable data stored, off-chain encrypted storage, hashed proofs on-chain.

Collateral-valuation drift. Haircuts may tighten, lowering credit limit. Mitigations: monthly re-scoring, borrower dashboard alerts for material changes.

Last updated 6 days ago

Smart-contract risk: Bugs, oracle failures, or economic exploits. Mitigations: third-party audits, formal-verification of rate math, circuit breakers.
Credit default risk. Borrowers fail to repay principal or interest. Mitigations: 3CA underwriting, junior first-loss tranche (sUSD3), dynamic DRP pricing, monthly model refresh, external collections via Credit Slasher.
Liquidity risk. Redemption requests exceed the cash buffer. Mitigations: idle capital parked in Aave for instant withdrawal, utilization-linked base rate, redemption queue with time-based throttling.
Oracle & rate-feed risk Manipulated price or SOFR feeds distort LTVs and rates. Mitigations: redundant Chainlink feeds, internal TWAP guards, emergency “pause & price-lock” switch.
Governance / upgrade risk. Malicious or negligent parameter changes. Mitigations: multisig with time-lock, published upgrade roadmap, veto window for USD3 governance token holders (road-map).

Privacy & data-leak risk. Exposure of KYC, bank, or bureau data. Mitigations: minimal viable data stored, off-chain encrypted storage, hashed proofs on-chain.

Collateral-valuation drift. Haircuts may tighten, lowering credit limit. Mitigations: monthly re-scoring, borrower dashboard alerts for material changes.

Last updated 6 days ago