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USDM was built to be the safest asset in crypto.
This page provides transparency on the risks involved and the mitigating strategies Mountain Protocol takes to reduce such risks. This disclosure can help current and prospective USDM holders understand their risk level compared to other on and off-chain alternatives.
USDM Reserves are invested only in short-term (3mo or less) US Treasuries risk.
These assets are considered the lowest risk USD-denominated assets. However, these assets rely on the US continuing to service its debt, a systemic risk present in most modern financial instruments.
USDM Reserves are over-collateralized to ensure solvency even in an interest rate scenario. However, interest rates are unpredictable and accelerated interest hikes could reduce the value of the portfolio which, coupled with a bank run, could result in impairment of USDM.
Such interest rate hikes would need to be over 200bps in a short period (~6 weeks).
Mountain Protocol provides 24/7 liquidity to primary customers via a USDC-denominated line of credit. If net withdrawals are higher than the available liquidity, withdrawal times will default to T+2 business days, in line with Traditional Financial markets.
There is no limit to the amount of funds that can be withdrawn on a T+2 business day timeline.
Mountain Protocol 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.
Mountain Protocol reserves the right to delay liquidity in the rare occurrences when partners' services are interrupted.
Mountain Protocol is built with minimal counterparty risk, leveraging regulated financial partners whenever possible.
Main counterparties include:
- Onramps (e.g. Coinbase Prime)
In the rare cases where Mountain Protocol determines that counterparties are facing potential risks, measures may be applied to mitigate placing USDM Reserves at risk. These measures might include the temporary pausing of purchase and redemption of USDM.
Due to the permissionless nature of USDM as an ERC20 token, we expect trading venues to open for USDM against other digital assets and/or fiat. The pricing of USDM in these venues might differ from $1.
Secondary market pricing for USDM might vary due to lack of liquidity, failure of arbitrageurs or market makers working in such pools, technological risks, and oracle manipulations or other types of attacks.
The Company is not liable for losses related to secondary market pricing risks.
Due to the permissionless nature of USDM as an ERC20 token, we expect protocols to build with USDM. This does not mean an endorsement of such protocols, and users should do their own research before interacting with such protocols. Although Mountain Protocol 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 USDM in 3rd party protocols, including hacks or any other losses that could materialize.
Transactions in the blockchain are irreversible. This means that once you submit an order, whether in the Mountain Protocol platform or the blockchain, the Company or the network will execute such order on your behalf.
The Company is not responsible for losses related to errors in orders initiated by users.
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 in 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.
Mountain Protocol's 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, Mountain Protocol leverages banking-grade technology, protected from external access, making it hard for attackers to penetrate.
However, no software product is ever risk-free. The USDM smart contract is public; more information can be found here. The Company suggests that users conduct their own research before purchasing any digital assets, including USDM.
At Mountain Protocol, we acknowledge that centralized protocols require higher trust assumptions than those necessary for decentralized protocols, especially for Management and Directors of the Company.
The Company implements several strategies to mitigate the risks arising from centralization, including:
- Regulatory oversight by the Bermuda Monetary Authority.
- A bankruptcy-remote "USDM Reserve" setup.
- Proof of reserves and monthly attestations.
- Delegation of management of "USDM Reserves" to a licensed Investment Manager.
- Whitelisting bank accounts where "USDM Reserves" can be transferred to.
- Public disclosure of Directors and Management identities.
Users should conduct their own research before engaging with any digital asset, including USDM. If you have more questions during your process, reach out to [email protected] and talk with our team about the product setup and specific concerns.