Everyday institutions and investors take advantage of earning opportunities in DeFi and web3. At Donut, over $250 million has been safely invested and earning high-yield with us. DeFi is an emerging technology and as such, its risks differ from those in traditional markets. Donut 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. However, this is mitigated through careful partner diligence.
Lending Risk: With all types of lending, borrower default is a risk. We mitigate this with overcollateralization from 125% - 150% which protects lender funds from borrower defaults, as well as lending partner diversification.
Stablecoin Risk: Save uses the stablecoin USDC. USDC is fully backed by dollar reserves making it one of the the most secure stablecoins out there. 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. This is extremely unlikely as Ethereum has the most active developer ecosystem and applications built on top of it over any other blockchain.
Click here, to learn how Donut protects your funds on Save.