Risks

No DeFi protocol is without risks, and we’d like to be clear about them.

Exploits and hacks

All cryptocurrency is code, and code can have mistakes in it. Translating human language to Solidity can generate typos and translation errors, allowing hackers to find loopholes and exploit them. To minimize this risk, we will use static analysis tools and will get our contracts audited.

Centralization

In the initial stages, the protocol will be centralized. The administrative multisig will be able to perform extremely powerful and potentially harmful actions, however we plan on decentralizing the project heavily over time.

We have a partially doxxed team working for Carpet DeFi and the doxxed members of that team are on the multisig for non-automated treasury wallets.

We are known in the DeFi seigniorage space and our honour and reputation is more valuable to us than any money we could rug.

Administrative access is on multisig wallets and not all members on the multisig wallets are doxxed, so even physical threats or other crimes would be as useless as it would be horrible.

Depegging of stablecoins

Carpet DeFi trusts in the value of certain stablecoins. We spread risk by using multiple stablecoins instead of just one, but the depegging of even one can do a lot to our treasury.

We carefully choose these stablecoins, though, and even though depegging happens, it is often only a momentary issue that quickly gets resolved. Also please note that the BT does not loop its investments and does not borrow against assets, so a momentary drop in a stablecoin will not liquidate any of the BT investments.

In the event of a severe and permanent depegging though, it may cause severe damage to the Backing Treasury depending on the amount allocated to that stablecoin.

Wallet Hack or Scam

This is your personal safety as an investor. We view it as our communal responsibility to continuously educate investors on wallet safety and to fight an ongoing fight against scammers and hackers. Still many people get scammed or hacked and this is regrettable. Always get your information from reputable sources, make sure to double check domain names, be careful of which protocols you allow access to your coins, revoke contracts you’re no longer using, and never ever give anyone your seed phrase.