Risk Management Strategies

  1. Under-collateralized Loan Management:

  • Strict repayment schedules to mitigate default risk

  • Clear conditions for loan default (failing to keep up repayments)

  • Collateral and previous payments cover potential losses keeping the protocol solvent

  1. No Traditional Liquidation Risk:

  • Unlike typical DeFi loans, MortgageFi loans do not carry sudden liquidation risk

  • Loans enter default only if repayment terms are not met

  1. Oracle-Free Price Discovery:

  • Relies on market-driven pricing through arbitrage

  • Eliminates risks associated with oracle failures or manipulations

  1. Gradual Fund Integration:

  • 3-day streaming mechanism for new deposits and token sales

  • Prevents large-scale manipulation and flash loan attacks

  1. User-Triggered Default Resolution:

  • Community-driven approach to handling defaulted loans

  • Incentivizes users to maintain system health

  • Efficiently returns funds to the Earn pool

  1. Diversification of Assets:

  • Support for multiple ERC20 tokens spreads risk across various assets

  1. Fixed USD Repayments:

  • Protects the system from volatility in borrowed asset prices

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