Risk List

nStables are built to be ultra-safe assets. This page provides transparency on the risks involved and the mitigating strategies adopted to reduce such risks. This disclosure can help current and prospective nStables holders understand their risk level compared to other on and off-chain alternatives. Users should do their own research when deciding to purchase any digital asset.

Reserve/solvency

Debt default

nStables Reserve is invested following the Investment Policy.

These assets rely on the issuers continuing to service their debt.

Interest rate

When rates increase, the assets composing nStables Reserve will decrease in value (due to portfolio value sensitivity to interest rates). nStables Reserve is overcollateralized by a Reserve Buffer to provide solvency guarantees to users. Although this reserve buffer is calculated for some extreme cases, there is no way to predict with certainty that this will be enough. However, the short duration of the portfolio results in a low sensitivity for interest rates increases.

Liquidity

Redemption delays

nStables provides 24/7 liquidity. This liquidity line is sized to support normal operations with a size of a single-digit percentage of the total nStables outstanding. Suppose the net outflows from nStables are larger than the liquidity line. In that case, liquidity will default to T+2 business days, in line with the time markets take to open, liquidate assets, and onramp/transfer liquidity to users.

Financial partner uptime

nStables is built on top of enterprise-grade partners, providing Service Level Agreements (SLA) of 99%+. However, the uptime of services of such partners is not guaranteed (e.g., pause in Coinbase USDC redemptions). nStables reserves the right to delay liquidity in the rare occurrences when partners' services shut down to minimize nStables Reserve to risk exposure. In this case, the company will be biased towards keeping nStables Reserve assets in US Treasuries versus other stores of value since the former is the most secure.

Market

Secondary market pricing

Due to the permissionless nature of nStables as an ERC20 token, we expect trading venues to open for nStables against other digital assets and fiat. The pricing of nStables in these venues might differ from $1, and the Company needs to take direct action to ensure peg is reinstated, aside from serving a diversified pool of arbitrageurs and market makers. Secondary market pricing for nStables might vary due to lack of liquidity, failure of arbitrageurs or market makers working in such pools, technological risks, and oracle manipulation. The Company is not liable for losses related to secondary market pricing risks.

Non-endorsement of 3rd party protocols

Due to the permissionless nature of nStables as an ERC20 token, we expect protocols to build with nStables. This does not mean an endorsement of such protocols, and users should do their own research before interacting with such protocols. Although the company may engage in co-marketing campaigns with other protocols, such marketing does not endorse the safe use of those platforms. It should not be seen as a guarantee of the safety of such protocols. The Company will not be liable for losses related to using nStables in 3rd party protocols, including hacks or any other losses that could materialize.

Digital assets

Blockchain

Transactions in the blockchain are irreversible. This means that once you submit an order, whether in the nStables platform or the blockchain, the Company or the network will execute such an order on your behalf. The Company is not responsible for losses related to errors in orders initiated by users.

Authentication and private keys

Users are the sole responsible for keeping their platform credentials and private keys secure. Users are also responsible for other users they share those credentials too, whether that is by adding additional users to the platform or by sharing signing privileges. The Company is not responsible for losses arising from login credential security compromises, transactions initiated by users added by the account opener, or loss or mismanagement of private keys.

Technology

nStables' technology was designed to minimize the surface area for attacks. In the front, the smart contract is a simple ERC20, audited, and battle-tested contract. In the back, the company leverages banking-grade technology, protected from external access, making it hard for attackers to penetrate.

Smart contract

The nStables smart contract has been audited by Coinspect, a leading audit firm. However, no software product is ever risk-free. The nStables smart contract is public. The Company suggests that users conduct their own research before purchasing any digital assets, including nStables.

Backend

nStables backend is secured from external actors and leverages banking-grade technology to minimize risks. This includes traditional financial partners operating on reversible networks with decades of experience and billions in transactions, as well as more digital asset custody providers (Fireblocks) that ensure proper custody of digital assets. Despite using banking-grade secure partners, users should know that using any centralized provider carries risks.