Deposit Protection
PWRD is protected against stablecoin failures and certain smart contract risks
PWRD deposit protection comes from incentivising Vault users with higher yields. By rewarding Vault holders with a greater share of total protocol yields, Vault users agree to take on losses due to failure of any of Gro Protocol's component stablecoins or protocols.
This means if any of DAI, USDC, or USDT fails or gets off its peg, Vault holders absorb the loss and PWRD remains stable. The same is true if any of the underlying protocols fail and Gro Protocol loses money. Vault holders would absorb the loss and protect PWRD.


The protocol contains $2m of PWRD and $8m of Vault. The Utilisation Ratio would be 25% and the TVL of the protocol is $10m. The exposure to underlying protocols is as follows:
Protocol capital exposure as at 30th November 2021
In this scenario if there was a total failure from e.g. Convex the protocol would lose 14% of its value: i.e. $1.4m.
The loss would be absorbed entirely by Vault users, resulting in $2m of PWRD remaining, and now $6.6m of Vault.
As Vault absorbs the loss for PWRD deposits, the change for Vault would be -$1.4mn / $8mn = -17.5% even though the system overall has only experienced a -14% change. In other words, Vaults' loss is (1 + Utilisation Ratio) of the system overall loss due to the profit-sharing mechanism.
While Gro Risk Balancer systematically manages stablecoin and protocol risk, users should note that it cannot protect PWRD from acts of God or failure of Gro Protocol itself.
If you prefer higher yield and are willing to put in more effort to manage your PWRD stablecoins, you could also choose to stake PWRD tokens in our Pools for additional yields in Gro DAO tokens (GRO). If you provide PWRD liquidity to PWRD/3CRV pool, note that your PWRD will not be protected by Vault as you'll be holding LP tokens instead of PWRD directly; however, if you stake PWRD into the single-sided asset pool, the protection would remain in place.
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