There’s been some news circulating about the digital asset exchange FTX, their associated token (FTT), and the trading fund (Alameda). In short, FTX was one of the top three crypto exchanges in the US. They appear to have used close to $10 billion of customer funds to cover losses in their affiliated crypto trading fund Alameda. They have since filed for bankruptcy.

Frequently Asked Questions

Is Donut impacted by these events?

Donut had zero direct exposure to the digital asset exchange FTX, their associated token (FTT), or the trading fund (Alameda). One of Donut’s lending partners, Genesis, was impacted by the volume of redemption requests resulting from these events. The volume of redemption requests exceeded their current liquidity and in consultation with their professional financial advisors and counsel, they have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business. For more information on Genesis’ withdrawal pause, click here.

Is Donut experiencing any withdrawal issues?

To best protect your funds we will be temporarily pausing all deposits, withdrawals, and plan switches on Donut.

Why are my Donut funds safe during market turbulence?

All lending on Donut is protected by overcollateralization, often by 125% or more. This means for every $1 lent out, a borrower has to put up $1.25 of collateral in digital assets.

Borrowers typically post collateral in BTC and ETH. If prices fall, a borrower is asked to top up their collateral via a margin call or face liquidation. This mechanism seeks to protect your funds from market volatility.

Are there any coins I can pay attention to?

We only use USDC, a fully backed, regulated, and audited stablecoin. You can learn more on their transparency page here.

What is Donut’s approach to risk management?

We conduct extensive diligence on our 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, current security measures, and monitor collateral ratios. It's also important that our partners have governance procedures and the appropriate regulatory licenses to ensure your funds are safe.

How can I keep up with developments?

We will continue to update this FAQ as new information becomes available. If you have any questions, please do not hesitate to reach out to us in-app or at [email protected].

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