Execution Risk

There are 2 main execution-related risks with deUSD:

Slippage

While deUSD mitigates much of the tail risks around sustained negative funding rates, it introduces additional execution-related risks (which the EBF is built to cover).

The EBF serves less as a traditional "insurance fund" to protect against sustained negative funding rates: instead, its built to cover execution related costs from moving backing to (and from) sUSDS.

As described in the Execution Buffer Fund page, deUSD reduces exposure to funding rates as funding rates become more negative. It does so via the health of the EBF - as this decreases, more and more of the backing moves to sDAI.

Performance Issues

In some unlikely situations, deUSD and transactions relating to it could face scalability and performance issues based on external points of reliance:

• Network Congestion: High transaction volumes can lead to network congestion, increasing transaction costs and confirmation times. Mints and redemptions could take longer than expected, creating short term variations in prices

• Attacks on External Networks: Some networks deUSD relies on could come under various forms of economic or technical attack, having adverse impacts on deUSD.

Elixir mitigates these risks best as possible by choosing to put key points of reliance on battle-tested blockchains like Ethereum, and only utilizing the longest-lasting and highest quality venues for crucial features like liquidity.