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What are the risks?
What are the risks?

What are the risks saving with Minke.

Josh Reyes avatar
Written by Josh Reyes
Updated over a week ago

When you save and invest, your capital is at risk.

Digital currency is not legal tender, is not backed by any federal government and funds you deposit into DeFi protocols via Minke are not insured or covered by any consumer protections.

Minke makes every effort to keep your money safe and we always focus on integrating the most secure protocols, but please note that any investment entails risk.

Two main risks when using DeFi are smart contract risk and stablecoin de-pegging risk.

Smart contract risk

This relates to the potential for the smart contract to be hacked or have bugs in the code, so it is important to use providers who are audited by security experts. Minke only integrates battle tested DeFi protocols which are regularly audited.

mStable were recently audited by DeFi Safety and received a 93% pass rate, scoring 100% on smart contract safety. Read more here. You can view all mStable security audits here.

Aave is one of the most battle tested DeFi protocols in the ecosystem. You can view all Aave security audits here.

Depegging risk

This is the risk of the stablecoin losing its stable value against the dollar. Minke uses USDC as the default stablecoin. USDC is a product of Circle and its asset backing is attested monthly by Grant Thornton. You can read more about those attestations here.

mStable is a DeFi protocol that allows you to reduce the risk associated with holding one stablecoin by allowing you exposure to multiple stable assets via holding mUSD - which you can think of as a token representing an underlying ‘basket’ of assets.

For example, rather than solely holding USDC you can hold mUSD instead, which is backed by several stablecoins and the mStable native token MTA. Should any underlying stablecoin depeg, MTA is sold to re-collateralize and the depegged mUSD is burned.

You can read more about mStable here and here.

These are not exhaustive and you should make sure you are comfortable investing in an unregulated industry before doing so.

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