🤝Our Value to DeFi

Risks in DeFi

ALL DEFI INVESTMENTS ARE RISKY, BUT SOME ARE MORE RISKY THAN OTHERS

Risk permeates the turbulent and unpredictable world of DeFi. From inherent financial risks in any investment to smart contract risks unique to DeFi, investors could potentially lose money in a plethora of ways.

Apart from experiencing exponential growth, DeFi has also seen an increase in number of exploits and scams, primarily due to smart contract vulnerabilities. Victims are mostly left with little to no recourse and are unable to recover their losses. As news of DeFi exploits and hacks (which have caused losses in the hundreds of millions of dollars) become more common, DeFi projects are faced with the uphill task of gaining or maintaining the trust and confidence of their users.

The difficulty is accentuated for new DeFi projects that have yet to prove themselves. Even for established DeFi projects that have done their audits and eliminated the possibility of malicious exploits, we have seen how certain changes in external factors driven by benign commercial reasons can cause losses (e.g. losses suffered by investors of a yield aggregator caused by a change in fee structure of an underlying yield generating source).

Our Value

Stag Finance's cover protocol can promote confidence between users and protocols in the following ways:

• Users looking to interact with a protocol can gain confidence through the purchase of cover before commiting their assets. Not many users have the capability to assess smart contract quality of a protocol by themselves. Having coverage will provide users with greater reassurance when investing

• DeFi projects can become a Coverage Provider with Stag Finance to prove their confidence in their own projects and provide low-cost protection for their users by increasing the pool of available coverage

• DeFi projects can also become a Coverage Seeker themselves in case something goes wrong. This would allow the project to compensate users when necessary and minimise the damage to their reputation