Moderate risk — hybrid on-chain/RWA backing model with limited PSM redemption capacity, balanced by overcollateralization and diversified yield sources.
Top Risks
1
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.
2
Governance controls asset allocation from the PSM to various yield modules — governance capture could redirect USDC reserves into high-risk strategies, impairing peg stability.
3
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.
4
Protocol relies on external DeFi yield sources (lending, AMM LP) for backing rUSD, creating dependency on multiple external protocol risk profiles.
Risk Breakdown
Frequently Asked Questions
Is Reservoir Protocol safe to use?
Reservoir Protocol receives a B- risk grade (35/100) from Hindenrank, where lower scores indicate lower risk. 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.
What are the main risks of using Reservoir Protocol?
The key risks identified for Reservoir Protocol are: (1) 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. (2) 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. (3) The protocol depends on multiple external DeFi protocols for yield generation. An exploit in any of these external protocols could affect rUSD's backing.
What is Reservoir Protocol's risk score breakdown?
Reservoir Protocol scores 35/100 across eight risk dimensions: Mechanism Novelty: 3/15, Interaction Severity: 6/20, Oracle Surface: 5/10, Documentation Gaps: 4/10, Track Record: 4/15, Scale Exposure: 5/10, Regulatory Risk: 5/10, Vitality Risk: 3/10. The highest risk area is Oracle Surface at 5/10.
How does Reservoir Protocol compare to other CDP protocols?
Among 25 rated CDP protocols on Hindenrank, Reservoir Protocol ranks #10 by safety (lowest risk score = safest). Its 35/100 risk score and B- grade place it in the middle tier of CDP protocols.
Has Reservoir Protocol ever been hacked or exploited?
Reservoir Protocol scores 4/15 on the Track Record risk dimension, indicating some history of security incidents or exploits. Higher scores reflect more severe or frequent incidents. Review the full risk report for details.