The Risks of USDr

StableRock is committed to maintaining transparency. We must emphasize the risks associated with USDr, the measures we take to mitigate these risks, our ongoing risk management strategies, and any potential risks associated with stablecoins.

Types of Risks

Synthetic Dollar Risk
Custodial Risk
Exchange Failure Risk
Collateral Risk
Financing Risk
Liquidation Risk

The Risks of USDr as an RWA Stablecoin

While centralized stablecoins like USDC, USDT, and USDr offer stability and capital efficiency, they also come with certain risks:

Custodial Risk: There is custodial risk associated with bonds held in regulated bank accounts, which may be subject to unmitigable custody risk and vulnerable to scrutiny and freezing.
Dependency on Traditional Markets: These stablecoins rely on existing traditional market infrastructures and are influenced by continually changing country-specific regulations. This could lead to regulatory changes affecting the operation of stablecoins.
Zero Return Risk: Users face "zero return risk" as issuers absorb most of the returns while transferring the risk of decoupling to users holding fiat-backed stablecoins. This means holders of USDr may not directly receive asset returns.
Credit Risk: Unsecured credit conditions of issuers and underlying banks holding collateral assets, combined with other banking activities such as Silicon Valley Bank's lending activities, increase the risk of user funds loss in the event of bank default or bankruptcy.
Scrutiny and Seizure Risk: Any other centralized stablecoin using "real-world assets" (RWA) as collateral and distributing returns faces the same scrutiny and seizure risk. Governments or regulatory agencies may scrutinize or even seize these assets, affecting the stability of stablecoins.
Market Volatility Risk: Despite being backed by diversified real-world assets, the market value of these assets may still fluctuate, affecting the stability of USDr.
Systemic Risk: As USDr relies on specific financial infrastructures and institutions, any systemic issues (such as financial crises or significant market turmoil) could significantly impact the stability and liquidity of USDr.

StableRock strives to mitigate these risks through stringent underwriting standards, diversified portfolios, and ongoing risk management strategies. However, investors should still fully understand these risks and make prudent investment decisions.

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Last updated 9 months ago

The Risks of USDr as an RWA Stablecoin

While centralized stablecoins like USDC, USDT, and USDr offer stability and capital efficiency, they also come with certain risks:

Custodial Risk: There is custodial risk associated with bonds held in regulated bank accounts, which may be subject to unmitigable custody risk and vulnerable to scrutiny and freezing.

Dependency on Traditional Markets: These stablecoins rely on existing traditional market infrastructures and are influenced by continually changing country-specific regulations. This could lead to regulatory changes affecting the operation of stablecoins.

Zero Return Risk: Users face "zero return risk" as issuers absorb most of the returns while transferring the risk of decoupling to users holding fiat-backed stablecoins. This means holders of USDr may not directly receive asset returns.

Credit Risk: Unsecured credit conditions of issuers and underlying banks holding collateral assets, combined with other banking activities such as Silicon Valley Bank's lending activities, increase the risk of user funds loss in the event of bank default or bankruptcy.

Scrutiny and Seizure Risk: Any other centralized stablecoin using "real-world assets" (RWA) as collateral and distributing returns faces the same scrutiny and seizure risk. Governments or regulatory agencies may scrutinize or even seize these assets, affecting the stability of stablecoins.

Market Volatility Risk: Despite being backed by diversified real-world assets, the market value of these assets may still fluctuate, affecting the stability of USDr.

Systemic Risk: As USDr relies on specific financial infrastructures and institutions, any systemic issues (such as financial crises or significant market turmoil) could significantly impact the stability and liquidity of USDr.