Is Overnight Finance Safe?
Risk Grade: B- (28/100)
Overnight Finance is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — straightforward yield aggregation with clean track record, balanced against multi-protocol dependency and rebasing composability challenges.
Overnight Finance issues USD+, a yield-bearing stablecoin pegged 1:1 to USDC that generates returns by deploying collateral across DeFi lending protocols. With $18M TVL, its B grade reflects the straightforward yield aggregation model and clean track record, offset by dependency on multiple underlying DeFi protocols for yield generation.
TVL
$18M
Mechanisms
6
Interactions
4
Value Grade
D
Key Risks for Overnight Finance Users
USD+ generates yield by deploying your USDC into multiple DeFi protocols. If any of these underlying protocols suffers a hack or exploit, the USDC backing your USD+ could be partially lost.
USD+ uses a rebasing mechanism where your token balance increases daily. Some DeFi protocols don't properly handle rebasing tokens, which could cause issues if you deposit USD+ into incompatible platforms.
USD+ is pegged to USDC. If USDC itself loses its peg (as briefly happened in March 2023), USD+ would be affected as well.
Top Risk Factors
- •Third-party protocol dependency — USD+ yield is generated by deploying stablecoins into multiple DeFi protocols (Aave, Compound, etc.). A vulnerability in any underlying protocol could result in loss of the collateral backing USD+.
- •Rebasing mechanism composability — USD+ uses positive rebasing to distribute daily yield. Rebasing tokens can cause accounting issues when used in DeFi protocols that don't properly handle balance changes, potentially leading to value loss.
- •Stablecoin depeg risk — USD+ is pegged 1:1 to USDC and backed by USDC-denominated yield positions. A USDC depeg event would directly impact USD+ holders.
Risk Score Breakdown
Overnight Finance's highest risk area is Documentation Gaps (4/10). Here's how each dimension contributes to the overall 28/100 score:
Read the Full Overnight Finance Risk Report
This protocol has 2 collapse scenarios. 1 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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