Build is our balanced saving strategy, offering a protected base APY of 5%. Build is not FDIC insured, therefore not zero-risk. Here is what an investor should know:
Partner Platform Risk: We lend directly to prime brokers and institutional investors to earn you higher rates. There is always a risk of partner failure. However, this is mitigated through careful partner diligence.
Lending Risk: With all types of lending, borrower default is a risk. We mitigate this with overcollateralization from 125% - 150% which protects lender funds from borrower defaults, as well as lending partner diversification.
Asset Risk: Build uses the stablecoin DAI, which is backed with fiat and cryptocurrencies. There is always a non-zero risk that any stablecoin will depeg, including DAI. To ensure the strength of its peg, DAI has a mechanism that can always return the price to the peg if it ever deviates, which you can read more about here.
Technology risk: Donut is built on Ethereum's infrastructure, which could potentially fail. This is extremely unlikely as Ethereum has the most active developer ecosystem and applications built on top of it over any other blockchain.
To learn how Donut protects your funds on Build, click here!