Why is the LUSD Safety Score 70/100?

The score is calculated based on asset stability, protocol audit history, and chain security, then adjusted for liquidity depth ($246,727) and utilisation rates.

Safety Audit: LUSD on Aave V3

Baseline Composition 78.33 pts

LUSD

Asset Strength

Aave V3

Protocol Trust

Arbitrum

Chain Security

We start with a weighted average of the asset, protocol, and chain reputation scores.

Safety Score Calculation Methodology

Base Score (Typically 60-80 pts)

Weighted Average Formula:
Base = (Asset Score × 0.4) + (Protocol Score × 0.4) + (Chain Score × 0.2)

Risk Penalties

Low TVL (<$1M): -5 to -15 pts
Very High Util (>90%): -10 pts (withdrawal risk)
Extreme APY (>15%): -5 to -10 pts (volatility risk)
Smart Contract Risk: -20 pts if audits are outdated

Deep Dive DeFi Risk Audit Report

Smart Contract Integrity

Our audit algorithm prioritises technical risk vectors. For Aave V3, the Safety Score of 70.33 reflects the robustness of the codebase. We specifically analyse time-lock delays and admin key controls, which are vital for preventing 'rug pulls'.

Liquidity Solvency

The liquidity depth currently stands at $246,727. For potential entrants, this volume serves as a primary buffer against instability, ensuring that typical retail exits can occur without impactful price deviation. In the event of a market downturn, deep liquidity acts as a shock absorber.

Utilisation Dynamics

Operating at 67.67% efficiency, the lending market for LUSD is functioning as intended. There is ample buffer for withdrawals while still generating consistent interest for suppliers. This metric is the heartbeat of the lending market; deviations from the 40-80% range often signal inefficiency or impending liquidity crunches.

Understanding DeFi Risks

What is Smart Contract Risk? Smart contract risk refers to the possibility of bugs or vulnerabilities in the code governing the protocol. Even audited protocols can suffer exploits if unforeseen vectors are discovered.

What is Financial Risk? Financial risk involves market factors like liquidity crises (inability to withdraw) or asset de-pegging. Our score penalizes low liquidity pools to account for this.

Is the Safety Score a guarantee? No. The score is a probabilistic assessment based on historical data and current metrics. It cannot predict "black swan" events or zero-day exploits.

Data Source: Internal indexer. Active Tracking verified at: 04 Dec 2025, 10:05 UTC.
Disclaimer: This audit is an automated analysis tool for educational purposes. Smart contract risk is never zero. Always conduct your own due diligence (DYOR) before depositing funds. Terms of Service apply.

Risk Audit