Protocol Risks & Mitigations
While BetterBank is built on tested frameworks and experienced design, every DeFi protocol carries inherent risks. The following sections outline known risks to the protocol and the safeguards in place to mitigate them. This is a non-exhaustive list, but it reflects an honest effort at transparency and risk disclosure.
🧩 Contract Risks
Smart contracts are immutable and trustless, but that also means any flaw or vulnerability in the code can be exploited. BetterBank relies on code deployed to the blockchain — not on traditional legal contracts — making smart contract safety critical.
Tried and true code
BetterBank is built on Aave V3, a codebase that has secured billions in TVL and been tested under real-world conditions for years.
Experienced Developer
Our lead developer and cofounder has extensive experience in DeFi, with successful deployments of Aave forks and multiple seigniorage protocols. He's a known name for contract auditing and troubleshooting.
Audit by Consensys Diligence
BetterBank launches with an audit by Consensys Diligence, one of the most respected audit firms in Web3. This gives confidence that the core logic is safe and externally verified.
🧊 Risk of Temporarily Frozen Assets
There may be instances where all available tokens of a specific type have been borrowed, temporarily preventing withdrawals. While this is rare, it's possible in high-utilization events.
Extreme Interest Rates
Interest rates automatically spike past 80% utilization, incentivizing quick repayment or new deposits, freeing up assets for withdrawal.
Maximum Borrowing Potential (MBP)
Borrowing is disabled beyond 80% utilization, capping demand and protecting liquidity. Withdrawals remain available until 100%.
Treasury is a Depositor
The treasury holds funds in the Stronghold and commits not to withdraw once utilization is near MBP, adding a backstop layer of available liquidity.
💸 Risk of Bad Debt
In rare cases — such as a liquidation cascade during network congestion — seized collateral may not fully repay borrowed assets. This can occur if LP-based collateral is shallow or slippage is too high.
Favor LP Cushion
A dedicated LP buffer is maintained to absorb slippage during liquidation events, helping reduce price impact and increase repayment efficiency.
Borrow Limits
Borrowing is capped per asset, especially in early stages, to limit exposure to any one asset. These limits are updated manually and will later be automated.
Isolation Mode
Tokens with shallow liquidity are marked isolated and may only be borrowed against their matching Favor LP, preventing unsafe cross-lending.
Protocol-Owned Liquidity (POL)
BetterBank will build LPs using treasury assets to deepen liquidity, especially for isolated tokens. Once healthy, these tokens may have isolation lifted.
🔬Risk of Design Mistakes or Innovation in Attack Forms
BetterBank introduces novel mechanics that haven’t been widely tested in the wild. While the system is carefully designed and reviewed by experienced developers, innovation in DeFi always carries the potential for unexpected attack vectors. We stay vigilant, conduct ongoing reviews, and work with trusted white hats to stay ahead of emerging threats.
A team in the know
BetterBank is built by developers who are deeply involved in DeFi. They actively test and challenge their own assumptions to uncover potential vulnerabilities.
Bug bounties and white hats
A bug bounty program will be initiated as soon as the treasury allows. BetterBank maintains an extensive white-hat network, with trusted experts occasionally reviewing or attacking the system in good faith.
☢️Extreme Outcomes
In rare scenarios where liquidity dries up completely, there is a theoretical risk of a system-wide failure through complete and utter disinterest by people to ever invest again, regardless of the benefits and the incentives. This is beyond just a bank run in Tradfi, because BetterBank can take a few of those. While multiple safeguards are in place to prevent this, users should understand that DeFi protocols are not insured like traditional banks. BetterBank’s design significantly reduces this risk, but it remains a tail-end possibility to be aware of. Even in this extreme situation though, the resillient design of BetterBank should be sufficient to protect against Strongholder investment loss. In all fairness though, if we think of such extreme outcomes, the opposite is also possible. BetterBank may theoretically become so popular that there is a global takeover, where BetterBank becomes the new standard of finance.
🧾Final Disclaimer
BetterBank is designed with care, security, and sound tokenomics at its core. However, DeFi is inherently risky, and no set of smart contracts can guarantee safety in all scenarios. We believe in radical transparency, and we offer this page not as a scare tactic, but as part of our commitment to informed participation.
BetterBank acknowledges and addresses DeFi-specific risks by combining battle-tested architecture, intelligent tokenomics, and proactive risk management and engineering. Users are encouraged to:
Use separate wallets for Stronghold and Wildlands positions.
Spread out larger investments over even more wallets.
Stay informed via this documentation and the official channels.
Understand that even with these safeguards, DeFi carries inherent risk and should be used responsibly.
Please use BetterBank responsibly.
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