Risks

Just like using any of the leading DeFi protocols, there are always risks you should know about. At StableNest, we want to be upfront about the primary layers of risk:

Protocol Risk

Our smart contracts facilitate integrations with major DeFi protocols on Sui, and there is always added risk with any new protocol.

Integration Risk

Since the yield we accumulate comes from our integrated protocols, the risks associated with them are also something we have to account for. If one of those protocols is exploited or has a critical design flaw, then by virtue of our funds being deployed there, it affects our users as well.

Our risk monitoring system works 24/7 to monitor each protocol at the blockchain level, allowing us to detect and respond to potential issues much faster than manual monitoring could achieve.

Our current integration partners on Sui include:

• Scallop Protocol

• Navi Protocol

• Suilend Protocol

• Alphalend Protocol

Stablecoin Risk

The underlying stablecoins (USDC, USDT) can lose their peg to the US dollar due to market conditions, regulatory issues, or problems with the stablecoin issuer. While rare, this represents a fundamental risk to any stablecoin-based strategy.

Lending Risk

When utilization rates reach full capacity and 100% of funds have been borrowed from a protocol, lenders may be unable to withdraw from that specific pool immediately. This scenario typically causes rates to increase significantly as it creates imbalance in the market.

Because our funds are diversified across multiple Sui lending protocols, we can intelligently balance deposits and withdrawals to help ensure we can fulfill redemption requests on demand, though extreme market conditions could still impact liquidity.

Smart Contract Risk

Despite audits and testing, smart contracts can contain bugs or vulnerabilities that could be exploited. The Sui blockchain itself, while designed for security and performance, is relatively new compared to more established networks.

Regulatory Risk

DeFi regulations continue to evolve, and future regulatory changes could impact the operation of StableNest or the underlying protocols we integrate with.