Risk Warning

cgUSD aims to be the safest RWA stablecoin in cryptocurrency.

This page will provide information about the risks that may be involved and the mitigation strategies that Cygnus Finance may take to reduce those risks. This will help current and potential cgUSD holders understand its level of risk compared to other on-chain and off-chain alternatives.

Users should conduct their own research when deciding to purchase any digital asset. If you have any questions about these risks, please contact us at [email address].

U.S. debt default

As a result of the continued turmoil in the global political and economic situation, rating agencies such as Moody's have taken risk-correction measures such as rating downgrades for different sovereigns.

Although United States Treasuries are considered to be the least risky dollar-denominated assets, they are nonetheless dependent on the assumption that the United States Government will continue to service its debt. While this is a systemic risk that is unavoidable with most modern financial products and instruments, we are still informing you that the likelihood of it happening is not mathematically zero.

Cygnus Finance has chosen a portfolio of near probable short maturities, which are among the lowest risk tiers even among U.S. Treasuries, and which will go a long way toward protecting the interests of all cgUSD holders.

Interest rate changes

Movements in the interest rate markets are unpredictable, and the Federal Reserve's interest rate regulation policies may cause fluctuations in the fair value of the asset portfolio, which may affect the market value of the collateral.

Cygnus Finance endeavors to minimize this risk through excellent duration management and will have a certain amount of overcollateralization and insurance protection to ensure the adequacy of the collateral assets.

Market risk

Based on the unlicensed and highly composable nature of cgUSD and wcgUSD as ERC tokens, we predict that cgUSD and wcgUSD may form trading pairs or liquidity pools with other tokens on multiple decentralized or centralized trading venues.

On these occasions, the pricing of cgUSD and wcgUSD, for example, in a particular secondary trading market, may differ from fair value due to liquidity pricing, trading algorithmic bias such as AMM, speculative operations by arbitrageurs or market makers such as trades in liquidity pools, technical risk, and prognosticator operational attacks.

Our team will push for other protocols to adopt cgUSD and wcgUSD. However, this does not imply that Cygnus Finance is committed to the security of such protocols. Users should conduct their own research before interacting with any protocol outside of Cygnus Finance's official website channels. While Cygnus Finance may conduct joint marketing campaigns with other protocols, these campaigns should not be viewed as a guarantee of Cygnus Finance's commitment to the security of such protocols.

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