Risks mitigation
We aimed to create a tool that allows users to not only preserve their capital but also generate income, even during market downturns or instability, without requiring active management.
We eliminated the following risks:
Freezing of funds by regulatory intervention.
User funds are placed directly on decentralized exchanges, making regulatory freezes significantly challenging. All operations are executed via smart contracts—immutable programs that eliminate the risks of human error or fraudulent activity.
That is why using the DSF app also does not require KYC. We firmly believe that advanced financial tools and independence should remain accessible to everyone, regardless of their background or location.
Loss of capital from third-party fund management or handing over private keys.
User funds are neither stored in our smart contracts nor managed by us. Instead, they are sent directly to liquidity pools on Curve. We do not invest or trade with user funds, and every transaction — from deposits to withdrawals — can be transparently tracked on the blockchain.
Loss of funds due to low liquidity in trading pairs.
We use the diversification approach and utilize several liquidity pools to enhance the sum liquidity to allow bigger capitals land into the DeFi industry. We are going to add several pools more to enhance the cap of capital users able to deposit.
Loss of capital due to currency exchange rate fluctuations (impermanent loss)
We work exclusively with stablecoins, avoiding volatile assets to eliminate impermanent loss. However, even stablecoins can experience minor fluctuations—typically between $0.99 and $1.01. These slight changes can result in small variations in the value of your capital during the deposit or withdrawal process.
This phenomenon is known as slippage and occurs due to market conditions on the exchange. Specifically, the prices of assets in the liquidity pool depend on the supply and demand balance for each asset, which can affect their relative pricing.
Remaining DeFi Risks
While we’ve mitigated many risks, certain risks common in DeFi remain:
☑️ Infrastructure Risks: Examples include stablecoin depegging or a “collapse” of the Ethereum or Tether ecosystems. ☑️ Counterparty Risks: This refers to potential breaches of Curve or Convex protocols, specifically in the liquidity pools where funds are placed. ☑️ Smart Contract Risks: The possibility of vulnerabilities in smart contracts being exploited.
How We Minimize Risks
✔️ Infrastructure Risks: We exclusively use top-3 stablecoins by market cap and “overcollateralized” crypto-assets (secured by 280%+). These assets have maintained excellent performance even during market crises. As for a potential "collapse" of Ethereum, such a scenario is virtually impossible given the scale, liquidity, and technological foundation of the ecosystem.
✔️ Counterparty Risks: Like many major DeFi players, Curve has faced security breaches in the past. However, funds were returned to users, and the platform significantly strengthened its security. Curve regularly undergoes audits and is supported by key DeFi ecosystem players. Check Safety Section for details
✔️ Smart Contract Risks: As noted earlier, DSF smart contracts do not store user funds—they act as a service layer connecting counterparties. Furthermore, our contracts have been audited, and we are committed to regular audits moving forward. Check Audit here
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