Risks

Borrowing against a volatile asset carries real risk. Here's what can go wrong, in plain words, and what OMEGA does about it.

#For borrowers

Your loan can be liquidated. If ADA falls far enough that your loan reaches 70% of its ADA's value, part of your ADA is sold to repay it, with a bonus of 5% to 10% to the buyer. Borrow well below the limit, and add ADA or repay if ADA falls.

The fee can change between terms. Your fee is fixed for each 90-day term, but the next term starts at the fee in force then, within the limits of 1% to 15%.

Busy networks. In a fast market, Cardano can be congested and your transaction may take longer to go through. Don't leave adding ADA to the last moment.

#For stability pool depositors

You may get ADA back instead of oUSD. Liquidations swap the pool's oUSD for ADA at a discount. If ADA keeps falling before you withdraw, that ADA can be worth less than the oUSD it replaced.

Yields aren't guaranteed. What you earn depends on how much OMEGA borrows and earns, and on the price of OMEGA.

#For everyone

Smart contracts. The contracts are thoroughly tested and will be independently audited before mainnet, but no code is entirely free of risk.

Prices. If Pyth or the Minswap pools fail or disagree, borrowing pauses until they recover. Liquidations have fallbacks so they keep working, but an extreme failure could still cause losses.

USDCx. oUSD from the peg module is backed by USDCx. If USDCx lost its dollar value, that part of oUSD's backing would too. The module is capped at 30% of the ceiling, and swaps into it can be paused.

Staking rewards. Your loan's ADA earns staking rewards as normal, but those depend on Cardano and your stake pool, not on OMEGA.

Governance. Settings are controlled by a 3-of-5 multisig at launch. Everything it can change is bounded by hard limits and public notice, and it can never touch your funds; see Limits and safeguards.