Peg Stability & Solvency Risk

The primary risk for any dollar-denominated on-chain asset is deviation from its intended value. Peg instability can arise not only from outright insolvency, but from market perception of redemption risk, delayed settlement, or uncertainty around the collateral backing. Even when collateral is fundamentally sound, short-term dislocations can occur if markets doubt whether redemption will be orderly under stress.

Why this risk exists in RWAs

Unlike crypto-native collateral, real-world assets introduce:

• Settlement timelines

• Issuer-level redemption mechanics

• Legal and operational dependencies

These factors can create temporary uncertainty, even if the underlying assets are high quality.

How rwaUSD mitigates this

First, through collateral selection. rwaUSD is intentionally restricted to highly liquid, near-cash RWAs, such as short-duration U.S. Treasury instruments and highly liquid tokenized gold. These are assets with deep global markets measured in trillions of dollars and observable pricing under stress.

Second, through conservative solvency parameters. Mint-to-value ratios are set meaningfully below 100% (illustratively in the ~70–85% range for liquid assets), ensuring over-collateralization even during adverse price moves. These buffers are calibrated for stress, not normal conditions.

Third, through insurance as a backstop, not a crutch. rwaUSD is designed to incorporate an insurance framework underwritten by Lloyd’s of London, intended to cover defined adverse scenarios affecting eligible collateral, including certain de-pegging, operational, or fraud-related events, subject to policy terms. Critically, insurance is treated as supplemental protection, not a single point of dependency. rwaUSD remains solvent without insurance; insurance exists to absorb tail risk and reinforce confidence during stress.