Is Cooler Loans Safe?
Risk Grade: C+ (38/100)
Cooler Loans is rated as elevated risk — multiple novel mechanisms and notable interaction risks.
Elevated risk — the no-liquidation treasury-backed lending mechanism is innovative but places the full solvency risk on the Olympus Treasury; OHM's history of extreme price volatility makes this backstop's adequacy the critical unresolved question.
Cooler Loans is Olympus DAO's native lending product that enables gOHM holders to borrow USDS (Sky stablecoin) at a fixed 0.5% APR with no price-based liquidations — the Olympus Treasury itself is the lender, and all loans persist indefinitely regardless of gOHM market price. With $190M TVL, $127M in active loans, and no incidents since launching in July 2024 (V2 in May 2025), it is the largest DeFi lending product without price-triggered liquidations. Its C+ grade reflects the genuine novelty of its mechanism — which eliminates oracle attack risk at the cost of treasury solvency risk — combined with governance concentration on all key parameters and OHM's historically thin liquidity. The 'no liquidation' guarantee is backed by Olympus Treasury USDS reserves, not smart contract enforcement, making treasury solvency the critical risk factor that cannot be assessed from on-chain data alone.
TVL
$215M
Mechanisms
5
Interactions
5
Value Grade
C-
Key Risks for Cooler Loans Users
The 'no liquidation' guarantee means the Olympus Treasury absorbs the loss if gOHM falls below the governance-set LTV (~2,961 USDS/gOHM). With OHM's history of 98.8% price declines, and current OHM price at ~$16, the treasury solvency backstop could be tested by a moderate further price decline.
All critical parameters (interest rate, LTV, default thresholds) are set by Olympus Community Governance (OCG) votes. A single successful vote can change any parameter, including setting unrealistically high LTVs that would allow borrowers to drain treasury USDS.
gOHM has extremely low market liquidity ($18K daily volume against $245M market cap). If you need to exit a large gOHM position or the protocol undergoes stress, market impact from selling gOHM in open markets can be severe.
Loans are perpetual with no maturity date. The Olympus Treasury must maintain over $127M in liquid USDS reserves indefinitely. Any treasury reallocation to illiquid investments reduces this buffer.
Top Risk Factors
- •The 'no-price-liquidation' guarantee holds only as long as the Olympus Treasury's USDS reserves exceed all outstanding loan balances ($127M+). If OHM price collapses enough that treasury backing per gOHM falls below the governance-set LTV (currently ~2,961 USDS/gOHM), borrowers have no economic incentive to repay — they keep their USDS while the treasury absorbs losses. The treasury's solvency is the protocol's only collateral backstop.
- •All key parameters — interest rate (0.5% APR), LTV (~2,961 USDS/gOHM), and default thresholds — are set by Olympus Community Governance (OCG) votes. A single governance vote can change any parameter, including setting an unrealistically high LTV or reducing the interest rate to zero. Governance capture or error poses a systemic risk to all outstanding loans.
- •gOHM has a 24-hour trading volume of approximately $18K against a $245M market cap — extremely thin liquidity. On-default, gOHM collateral is burned rather than auctioned; but borrowers who need to exit their gOHM position outside of Cooler Loans face significant market impact on thin order books.
- •The perpetual loan structure (no maturity date) means the Olympus Treasury must maintain continuous USDS liquidity for all $127M in outstanding loans indefinitely. Any treasury reallocation to non-liquid assets reduces the USDS buffer, concentrating liquidity risk in a single asset.
How Cooler Loans Compares to Peers
Cooler Loans ranks #56 of 99 Lending protocols (below-median — riskier than average). At a risk score of 38/100, it's in line with the sector average (37/100).
Adjacent peers: EtherFi Borrowing Market (C+, 37/100) is ranked just safer, and Jupiter Lend (C+, 38/100) is ranked just riskier.
See the full Lending sector leaderboard or the Cooler Loans vs Jupiter Lend comparison.
Common Questions about Cooler Loans
Plain-English answers based on Cooler Loans's scores across Hindenrank's 8 risk dimensions. The highest-scoring (riskiest) dimension is Mechanism Novelty (9/15).
Has Cooler Loans ever been hacked or exploited?
Cooler Loans has a fairly clean operational history. The track record dimension scored 3/15, indicating minor or no significant incidents on record. A clean track record is a positive signal but it does not guarantee future safety, especially as protocol complexity grows.
How much money is at stake in Cooler Loans?
Cooler Loans currently holds more than $215M in user deposits. A protocol of this size typically has deeper liquidity, more eyes on the code, and more attention from auditors — but it also means a single failure has a much larger blast radius.
What's the worst-case scenario for Cooler Loans?
Hindenrank has identified specific collapse scenarios for Cooler Loans. The most prominent: "OHM Price Collapse Rendering $127M in Loans Undercollateralized". The trigger condition is gOHM market price falls below 2,961 USDS (the current governance-set LTV) — approximately equivalent to OHM at ~$14-16 depending on staking ratio — making all outstanding Cooler Loans economically undercollateralized. Reading through the full scenario list on the protocol page is the single best way to understand the actual failure modes — generic "smart contract risk" is rarely the thing that takes a protocol down.
Is Cooler Loans regulated or insured?
Cooler Loans has low regulatory exposure on Hindenrank's framework (3/10). The protocol is structured in a way that minimizes counterparty and jurisdiction concentration, though regulatory risk in crypto can change rapidly. No DeFi protocol carries FDIC-style insurance — even with low regulatory risk, depositors are not protected in the way bank customers are.
What are the biggest red flags for Cooler Loans?
Hindenrank's retail-focused risk audit flagged: The 'no liquidation' guarantee means the Olympus Treasury absorbs the loss if gOHM falls below the governance-set LTV (~2,961 USDS/gOHM). With OHM's history of 98.8% price declines, and current OHM price at ~$16, the treasury solvency backstop could be tested by a moderate further price decline. All critical parameters (interest rate, LTV, default thresholds) are set by Olympus Community Governance (OCG) votes. A single successful vote can change any parameter, including setting unrealistically high LTVs that would allow borrowers to drain treasury USDS. gOHM has extremely low market liquidity ($18K daily volume against $245M market cap). If you need to exit a large gOHM position or the protocol undergoes stress, market impact from selling gOHM in open markets can be severe.
Should beginners deposit into Cooler Loans?
Cooler Loans's C+ grade puts it in the elevated-risk band. This is not a beginner-friendly protocol. Anyone depositing here should treat the position as speculative and avoid concentrating significant savings in it.
How does Cooler Loans compare to safer Lending alternatives?
Cooler Loans is one protocol in Hindenrank's Lending coverage. The safest Lending protocols on the leaderboard tend to share three traits: a long incident-free track record, conservative mechanism design, and high-quality public documentation. Compare Cooler Loans against the full Lending ranking before committing capital.
For the full 8-dimension score breakdown, the radar chart, and dependency graph, see the Cooler Loans risk report.
Read the Full Cooler Loans Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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