Beyond social trust, protecting your funds requires robust technical and platform-level safeguards. Here’s how the protocol ensures security and reliability from a technical standpoint:
🔐 Smart Contract & Technical Risks
Smart contracts are at the heart of the protocol. But even audited contracts can have vulnerabilities, such as:
- Locked or inaccessible funds.
- Misdirected payouts.
- Exploitable logic errors.
To protect users, the protocol strictly incorporates:
- Heavily audited, proven codebases like SAFE (formerly Gnosis Safe) for multi-sig wallets and Aave for yield-bearing stablecoins. Both are trusted by leading DAOs, institutions, and DeFi projects, and collectively secure billions of dollars in assets.
- Independent third-party security audits before public launch.
- Open-source contracts that are regularly reviewed and updated to stay aligned with best practices.
The goal is a system that is not only secure from day one — but keeps improving over time.
⚙️ Stablecoin Counterparty Risk
USDC is a centralised stablecoin, meaning its value depends on the issuing company (Circle) holding enough reserves to back every dollar token in circulation.
If those reserves are ever compromised — through mismanagement, regulation, or censorship — users could lose access to their funds, or find their USDC holdings frozen or depegged.
To mitigate this risk:
- Future protocol versions may diversify across multiple stablecoins (e.g. USDC, USDT, GUSD) to avoid over-reliance on a single issuer.
- The DAO may explore integrating decentralised stablecoins like DAI or LUSD to further improve resilience
- The community will monitor issuer audits and reserve disclosures; shifting strategy if trust in any asset declines.
While USDC is widely used and considered stable today, we believe long-term resilience requires decentralisation wherever possible.