We conduct extensive diligence on lending partners and protocols to ensure their health and sustainability. This includes understanding how lending services operate, risk management procedures, and looking at the composition of borrowers and counterparty balance sheets for added security. We also engage in frequent dialogue with our partners to understand the health of loan loss reserves and current security measures. It’s also important that our partners have governance procedures in place that appropriately represent stakeholders.
Our lending partners thoroughly vet borrowers too. Wyre, Genesis, and Abra vet borrowers by assessing their financials and what they plan to borrow the capital for, favoring those who run lower-risk strategies and have healthier balance sheets. As an additional layer of protection, our partners have liquidity and duration risk infrastructure to appropriately hedge their loan books.
This due diligence was stress tested during the market events of June 2022, as interest-bearing crypto accounts were met with bankruptcy. During these unprecedented events, Donut continued baking high APY without interruption.