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Risks

Peridot pays more than a savings account because it carries risks a savings account doesn't. Here's the honest list, scored by severity and by who actually carries it. Read this page in full before you deposit more than you can afford to lose.

Smart-contract risk

medium

Affects: Everyone

Your deposit lives in on-chain code; a bug there could cost you funds. This is DeFi's irreducible base risk. Peridot mitigates it with a battle-tested Compound-style design, third-party audits, and conservative parameters, but mitigated isn't eliminated.

Liquidation risk

medium

Affects: Borrowers only

Let your health factor hit 1.0 and part of your collateral sells at a discount. Fully in your control: borrow conservatively, prefer stable collateral, keep an eye on open positions. Pure depositors never see this.

Liquidity risk

low

Affects: Everyone

Withdrawals draw on the pool's idle cash. At very high utilization, a large withdrawal may wait for repayments or new deposits. The jump rate model exists to make that state short-lived, not to promise it never happens.

Oracle risk

low

Affects: Everyone

Collateral prices come from Reflector on Stellar. A wrong price could trigger a bad liquidation or under-collateralized borrowing. Redundant feeds and sanity bands cut the odds; the residual sits mostly in volatile-asset markets.

Stablecoin & peg risk

low

Affects: USDC / EURC holders

USDC and EURC are Circle liabilities with attested reserves, not bank deposits. A depeg flows straight through to positions denominated in them, and there's no deposit insurance anywhere in DeFi.

Variable-rate risk

medium

Affects: Everyone

  • Supply APY can fall, sometimes sharply, as utilization drops.
  • Borrow APR can rise mid-loan, accelerating what you owe.
  • Neither is capped; both are visible live before and after you act.

No advice, no insurance

Nothing here is financial advice. Peridot is non-custodial software: it cannot reverse transactions, reimburse losses, or recover keys. DeFi regulation varies by jurisdiction and may affect your access or tax treatment.

Read next#

Health factor & liquidation

The one risk you can simulate before taking it.

Security & audits

Audit reports and security posture.

Common questions

Is my money insured on Peridot?

No. There is no deposit insurance anywhere in DeFi. Protocol reserves act as a buffer, but they are not a guarantee and they are not a government scheme.

What is the single biggest risk?

Smart-contract risk, because it is the one you cannot manage by behaving prudently. It is mitigated by audits and by following the battle-tested Compound money-market design, but the honest advice remains not to deposit more than you could afford to lose entirely.

Can Peridot freeze or seize my funds?

No. Peridot is non-custodial software and cannot move your assets, reverse a transaction, reimburse a loss or recover a lost key.

What happens if USDC loses its peg?

Positions denominated in it would follow the price down. USDC and EURC are issued by Circle, a regulated issuer with attested reserves, but they are issuer liabilities rather than bank deposits.

Last reviewed on .