Level
  • Introduction
    • Level Overview
    • Stablecoins: The Next Level
  • How It Works
    • lvlUSD
      • Peg Stability
    • slvlUSD
    • Risks
  • Rewards
    • What is Level XP
    • How to Earn XP
  • Technical Documentation
    • Security
    • Audits
    • Contract Details
    • Roles and Permissions
  • User Guides
    • How to Get lvlUSD
    • How to Stake lvlUSD
    • How to Earn Level XP
    • slvlUSD: Key Use Cases
    • lvlUSD: Key Use Cases
    • How to Refer Users
  • FAQ
    • General FAQ
  • Legal
    • Terms and Conditions
    • Privacy Policy
  • Links
    • Website
    • X/Twitter
    • Discord
    • Telegram (EN)
    • Telegram (CN)
    • Github
Powered by GitBook
On this page
  • Collateral Risk
  • Lending Protocol Risk
  • Smart Contract Risk
  • Operational Security Risk
  1. How It Works

Risks

Description of Risks & Mitigations

PreviousslvlUSDNextWhat is Level XP

Last updated 16 days ago

This section highlights the risks of using the Level protocol, how we mitigate the risks and any plans to minimize these risks further.

Collateral Risk

  • Description: Risk that the underlying collateral is insolvent.

  • Mitigations:

    • Strict criteria for deciding what collateral to accept to back lvlUSD.

    • Currently, the only accepted collateral are USDC and USDT.

Lending Protocol Risk

  • Description: the underlying lending protocols may accrue bad debt.

  • Mitigations:

    • Strict criteria for deciding which lending protocols to deploy collateral into, including size, what collateral a lending protocol accepts, and historical performance during periods of heightened volatility. For lending protocols where collateral assets are selected by curators, we apply a similar methodology to the curators.

Smart Contract Risk

  • Description: Vulnerabilities in smart contracts that lvlUSD collateral is deployed into, or that manage lvlUSD collateral may make lvlUSD insolvent.

  • Mitigations:

    • All smart contracts are audited by reputable audit firms, and audits are published on our website ().

    • Internally, at least one other engineer peer reviews all smart contract code.

    • Level may also run competitions or have bug bounties in the future to gather feedback from the community.

Operational Security Risk

  • Description: certain protocol functionality, such as emergency collateral rescue functions, are controlled by permissioned roles, which may become compromised.

  • Mitigation:

    • [In progress] All smart contract owners are OpenZeppelin TimelockControllers that are controlled by the admin multisig

    • All admin roles are multisigs.

    • All end-signers are cold wallets.

    • The team cannot unilaterally execute transactions, there must be at least one external signer.

    • External signers are known, reputable firms such as Spearbit.

link