What can go wrong, plainly.

Peg risk

Applies to: Anyone holding USDM

USDM is pegged 1:1 to the US dollar and backed by reserves held by Moneta Digital. As with every fiat-backed stablecoin, the peg can briefly diverge from $1 in extreme market events or in response to questions about reserves. A sustained peg break would impact your USDM principal directly.

Mitigations

• Reserve attestations published by Moneta (links on /transparency)
• Two regulated issuers (Moneta + NBX) with public compliance posture
• Cardano-native implementation — no bridge or wrap risk

Smart contract risk

Applies to: Stablecoin Yield, DCA into Gold (Option B), Borrow Without Selling, RWA Strategy

All on-chain DeFi runs on smart contracts. Bugs, exploits, or design flaws can cause partial or total loss of deposited funds. Audits reduce this risk but never eliminate it. The Coalition's primary protocol partner (Fluid) is audited.

Mitigations

• Fluid's audit reports linked on /transparency
• Coalition only deploys into audited, doxxed protocols
• Don't deposit more than you can afford to lose to a black-swan protocol failure

Oracle risk

Applies to: DCA into Gold (Option B), Borrow Without Selling, RWA Strategy

Lending protocols rely on price oracles to value collateral. If an oracle feed goes stale, gets manipulated, or briefly diverges from spot in a flash event, collateral can be temporarily mispriced — potentially triggering unjustified liquidations. fGLD specifically relies on PAX Gold-equivalent oracle pricing.

Mitigations

• Fluid uses multiple oracle feeds (Binance, BitMark, PAX Gold-equivalent)
• Partial liquidation model on fGLD softens the impact of oracle-induced liquidation
• Don't size positions assuming oracle perfection — keep a wider safety buffer

Liquidation risk

Applies to: Borrow Without Selling, RWA Strategy

Borrowing positions get liquidated when collateral value drops (or debt grows) past a protocol-defined threshold. Standard liquidation seizes all collateral; Fluid's fGLD market uses a partial liquidation model that takes ~10% of collateral instead. Either way, liquidation is a loss event — sometimes a large one.

Mitigations

• Borrow at no more than half the protocol-allowed LTV — gives you a 2× safety buffer
• Set price alerts at 15–20% above your liquidation price
• Have a written plan for what you'll do at the alert line (add collateral or repay)
• Check positions weekly minimum, daily in volatile markets

Regulatory risk

Applies to: All playbooks

Stablecoin and DeFi regulation is evolving rapidly across jurisdictions. USDM availability, KYC requirements, and tax treatment of crypto loans may change. A change unfavorable to your jurisdiction could affect your ability to mint, redeem, or hold USDM, or change the cost basis of your positions.

Mitigations

• Both Moneta and NBX operate under EU/Norwegian regulation — among the more transparent regimes
• Review NBX's and Moneta's terms for your country before sizing positions
• Talk to a tax professional in your jurisdiction; this site is not tax advice

Custodial risk on exchanges

Applies to: Anyone leaving USDM on NBX or in a Moneta account

While USDM (or fGLD) sits on NBX or in your Moneta account before withdrawal, you do not hold the private keys. The Coalition's playbooks all assume self-custody as the starting point. Exchange custody is fine for short-term trading; it is not the right place to hold long-term Coalition deposits.

Mitigations

• Move USDM to a self-custodial Cardano wallet as soon as KYC and minting/buying are done
• Use a wallet you actually control (Eternl, Lace, Flint, Vespr, GeroWallet, Begin)
• Treat exchange balances as transit, not storage

Key management risk

Applies to: Anyone in self-custody

If you lose your 24-word seed phrase, your funds are unrecoverable. If your seed phrase is compromised (phishing, screenshot, malware, social engineering), an attacker can drain everything you hold. This is the most common cause of crypto loss — and the most preventable.

Mitigations

• Write the seed phrase on paper. Never take a photo. Never type it anywhere except the wallet itself.
• Store the paper copy in at least two physical locations (e.g. home + safety deposit box)
• Coalition staff will never DM you asking for seed phrases. If anyone does, they're attacking you.
• Consider a hardware wallet for larger holdings

See the Transparency page for audit links and on-chain addresses, or the Glossary for term definitions.