No. 08 · Trust
Risks
Every way of holding a dollar carries some risk. Here is what could affect USDh and sUSDh, how each risk is handled, and what is planned next.
For everyone#
| What could happen | How it’s handled | Good to know |
|---|---|---|
| The issuer runs into trouble. USDh is a claim on its issuer. | The reserves are run by a separate company. They are bought and held, with no borrowing and no trading. | Holders would rank as unsecured creditors of the issuer. USDh is not insured. See Reserves. |
| Checking the reserves. | Holdings are published in the app. Supply and every contract action are public on Ethereum. | Planned Monthly reports by an independent firm, published in the app. |
| A bug in the code. | Small contracts built on widely used open-source code. Every change waits 48 hours in public. | Planned An independent audit of the contracts, listed on Contracts and security. |
| Misuse of an admin wallet. | Powers are split across separate wallets, each needing several signatures. Big changes wait 48 hours in public. | Emergency powers (pause, freeze, switch off a stablecoin) act at once, and can only stop things. |
| USDh trades below $1. | Mint Users can redeem USDh with the issuer 1:1, which pulls the price back toward $1. | Other holders leave by swapping, at the market price at that moment. |
| A partner has a problem. Reserves, banking and conversions use outside firms. | Named, established firms only. See Reserves. | A partner issue could slow things down. |
| An address is frozen, or everything is paused. | Used only for sanctions and emergencies. Nothing can take your balance. | While frozen or paused, USDh can’t move. |
| Laws change. | USDh is not offered in the US, the UK, the EU and other restricted countries. | New rules could change where or how USDh can be used. |
| Ethereum is busy, or a transaction goes wrong. | Outside anyone’s control. | Fees can rise. A transaction sent to the wrong address can’t be undone. |
If you stake#
| What could happen | How it’s handled | Good to know |
|---|---|---|
| A government restructures its debt, and lenders take a loss. | Lending only in dollars, in short bonds held until they mature. USDh is never exposed. | If a government sUSDh lends to restructures, sUSDh takes the loss on that loan. |
| Rewards change or stop. | The rate is capped in the contract, and every decision is public. | The rate can be cut or paused at any time, and can be zero. |
| Bonds are slow to sell in a crisis. | Short bonds, and a 30-day exit that gives time to raise dollars. | In a crisis, exits could take longer. |
| You want to leave quickly. | The exit rules are fixed in the contract and shown in the app. | Leaving takes 30 days. Your price is fixed when you ask, and asking again restarts the clock. |
The full legal risk disclosures are the General Risk Disclosures and the Staking Risk Disclosure.