As an emerging technology, the risks differ from those in traditional markets. Donut does not have FDIC insurance and is not exempt from risk. There are four categories of risk to consider when using Donut. Here is what an investor should know:

  • Partner Platform Risk: We lend directly to prime brokers and institutional investors to earn you higher rates. There is always a risk of partner failure. We seek to mitigate this through careful partner diligence.

  • Lending Risk: With all types of lending, borrower default is a risk. We seek to mitigate this with overcollateralization from 125% - 150% which protects lender funds from borrower defaults, as well as the use of multiple lending partners.

  • Stablecoin Risk: Save uses the stablecoin USDC. USDC is fully backed by dollar reserves. Since its inception in 2018, USDC’s issuer Circle has conducted regular audits, published monthly attestations and weekly reserves breakdowns, and is fully regulated by the NY Department of Financial Services. Circle’s last two audits, for 2020 and 2021, have been published as part of Circle’s SEC filings as they prepare to become a listed public company on the New York Stock Exchange.

  • Technology risk: Donut is built on Ethereum's infrastructure, which could potentially fail.

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