Yield Strategy Risks
USX's yield model deploys capital into onchain strategies to generate sustainable returns. These strategies introduce distinct risk categories, from smart contract vulnerabilities to protocol exposure. This section outlines those risks and the mechanisms USX uses to manage and mitigate them.
DeFi Strategy Risk
The onchain yield component of USX is generated by deploying capital into various strategies through Blend's coordination system.
This introduces risks from 3rd party protocol's smart contract vulnerabilities, risk of impermanent loss, or sudden yield changes. A single point of failure in our partner protocols could lead to significant loss of funds, directly impacting USX peg (or value).
Security & Due Diligence
Blend's infrastructure:
USX protocol deploys capital across curated onchain yield strategies through Blend that include lending markets, tranching systems, and liquidity venues. Each strategy executes through Blend's non-custodial coordination layer which automates allocation, rebalancing, and risk enforcement according to defined policies.
Capital remains signer-bound within individual Gnosis Safes, ensuring isolation and non-custodial control, while Blend manages cross-chain execution and delta-neutral balancing. This structure allows USX to operate as a unified savings protocol on top of Blend's neutral automation network.
Blend has undergone six comprehensive security audits with reports available at https://docs.blend.money/resources/audits.
Mitigation Measures:
Strategy diversification across multiple uncorrelated DeFi protocols to prevent single points of failure.
Rigorous protocol due diligence including comprehensive code reviews and audit verification.
Dynamic rebalancing with continuous monitoring and capital reallocation based on risk/reward profiles.
Position limits capping allocation to any single strategy to minimize potential losses.
Transparency dashboard: Provides real-time visibility into onchain capital deployment, including distribution across DeFi protocols and allocation amounts.
On redemptions:
When you request to redeem sUSX to USX, the process now takes 14 days due to a temporary change in the yield distribution schedule. During the temporary epoch system (January - February 2026), withdrawals are available at any time, but withdrawing during the lockdown period forfeits all yield for that epoch. For more details, see Yield Distribution Schedule.
The redemption (sUSX → USX) process takes 14 days to complete.
Redeeming USX → USDC separately takes 14 days.
Alternatively, you can burn sUSX directly for USDC, which takes 14 days.
Note: instant redemptions for both sUSX -> USX and USX -> USDC is available through liquidity pools, but fees apply.
Reserve Fund
The reserve fund is a system-wide protection mechanism designed to cover potential losses from onchain strategies. USX.Capital dedicates 50% of collected protocol fees (10%) from all strategies to maintain an onchain insurance fund, which serves as a capital protection buffer.
The insurance fund targets a minimum coverage of 2% of deployed principal.
There is currently no upper limit on the fund size.
The community will be notified before implementing any changes to the fund.
The contract address for the insurance fund is published in Smart Contract Addresses.
For our full risk disclosure statement, please refer to important legal disclosures and risk disclaimers.
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