To earn and gain daily interest, the subscriptions from smart yield accounts are invested in the DeFi ecosystem and that’s how our users can have Yield on different tokens. Even though SwissBorg investment professionals scrutinize every platform we use, risks such as hacking and smart contract risks are still present. Safety Net is a security mechanism that protects funds in your Smart Yield wallet in such cases.
Building the Safety Net
Out of each day’s generated Yield profit, 25% is used for building the Safety Net.
The income displayed to the user is already deducted fees and safety net contributions. This way, the higher the profitability, the bigger the Safety Net.
How it works
In case of force majeure events that can lead to losing funds, SwissBorg will compensate the losses using the funds from the Safety Net.
Please note that we will take funds from the entire Safety Net regardless of the coin (for example, we will use BTC to compensate for the loss of ETH).
If the Safety Net is insufficient, we will deduct the resulting fund's loss to the users who hold yield in the loss coin.
The deduction is based on the proportional ratio of current holdings in the Yield program in the affected currency:
User_ratio_holding_affected_currency = (balance in the Yield program in the affected currency for this user / the sum of balances in the Yield program in the affected currency for all users)
User_deduction = User_ratio_holding_affected_currency * amount lost
If the deduction is not 0 (the user currently has holdings in the affected currency), a yield loss transaction subtracting the amount from his yield account in that currency will appear in the app. The deduction should take effect at the next cutoff.
To handle this deduction, we will block all movements associated with that specific Yield (no other Yield wallet will be affected) and we will cancel already scheduled subscriptions and redemptions.
The Safety net already contains CHSB tokens but they will not be used for the above steps. They will be reallocated afterward as a payback to compensate (in whole or part) the loss. This is done in order not to sell huge amounts of CHSB, which affects the price of the coin.
Important note! CHSB Yield does not have a Safety Net because all the funds are located inside the SwissBorg ecosystem and therefore not exposed to the DeFi platform's investment risks.