Risk

As with any advanced DeFi protocol, USDfi carries a set of risks that users should carefully consider and monitor:

1.⁠ ⁠Technological Risk Despite continuous auditing and on-chain transparency, there is always a risk of smart contract vulnerabilities. With the growing sophistication of attacks and technical knowledge in the blockchain space, potential exploits could cause temporary or permanent depegs.

2.⁠ ⁠Counterparty Risk in Carry Arbitrage Intermediaries The gold carry arbitrage strategy relies on highly vetted financial intermediaries who act as custodians for part of the reserve. Their failure or insolvency could impact the protocol’s intrinsic value.

3.⁠ ⁠Reserve Token Risk Part of the reserve is allocated to highly liquid stablecoins (USDC, USDT). Although selected for their reliability and market cap, structural issues with these assets could affect the protocol’s ability to maintain the peg.

4.⁠ ⁠Banking Risk As reserves grow, a portion of stablecoin liquidity may be moved to traditional bank accounts for diversification and to reduce concentration risk in digital assets. However, this introduces exposure to off-chain banking systems.

USDfi is committed to managing and transparently communicating these risks to the community, with constant updates.