Is Reservoir Protocol Safe?
Risk Grade: B- (35/100)
Reservoir Protocol is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — hybrid on-chain/RWA backing model with limited PSM redemption capacity, balanced by overcollateralization and diversified yield sources.
Reservoir Protocol issues rUSD, a stablecoin backed by a mix of USDC, DeFi yield positions, and Real World Assets. With $57M TVL, its B- grade reflects a reasonable architecture with standard CDP mechanics, moderated by governance-controlled reserve allocation risk and limited PSM redemption capacity.
TVL
$128M
Mechanisms
5
Interactions
4
Value Grade
C-
Key Risks for Reservoir Protocol Users
Redemption of rUSD to USDC through the Peg Stability Module is limited to the available USDC balance, which is a percentage of total rUSD supply. In a mass redemption event, not all holders could exit simultaneously.
Part of rUSD's backing comes from Real World Assets, which cannot be liquidated as quickly as on-chain crypto assets. This could delay redemptions during market stress.
The protocol depends on multiple external DeFi protocols for yield generation. An exploit in any of these external protocols could affect rUSD's backing.
Top Risk Factors
- •rUSD stablecoin backing includes Real World Assets (RWAs) alongside on-chain DeFi yield positions, introducing off-chain asset verification risk and potential illiquidity during stress events.
- •Governance controls asset allocation from the PSM to various yield modules — governance capture could redirect USDC reserves into high-risk strategies, impairing peg stability.
- •Redemption of rUSD back to USDC through the PSM is limited to available PSM balance (restricted to a percentage of total rUSD outstanding), creating potential redemption delays.
- •Protocol relies on external DeFi yield sources (lending, AMM LP) for backing rUSD, creating dependency on multiple external protocol risk profiles.
Risk Score Breakdown
Reservoir Protocol's highest risk area is Oracle Surface (5/10). Here's how each dimension contributes to the overall 35/100 score:
Read the Full Reservoir Protocol 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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