The flow of funds is designed to be decentralized and peer-to-peer, and eliminate counterparty risk nearly to the maximum extent possible.
The counterparty risk that exists is the bank that holds the Treasury Securities on behalf of Backed, the Treasury Security Token Issuer. At no point does Blueberry, Bloom, or any associated dev shop have any control over funds in the system. Bloom solely facilitates peer-to-peer transactions.
Lend/Borrow Matching and Open Position
The Bloom protocol represents a new and exciting way for lenders to earn near U.S. treasury bill rates. However, we take disclosures of risks seriously and want users to be making an informed decision when they use the protocol. The primary risks include the following:
Smart Contract Risk The Bloom protocol is intentionally a very stripped back, isolated codebase that touches no other part of Blueberry or associated protocols. In addition, we’ve completed one security audit of the protocol (see the Audit section of these documents) and expect to undergo further reviews in the future as the product scales. However, smart contract and other security risks will always exist.
Custodial Risk Custodial risk for RWAs can never be entirely eliminated, but we believe that the custodian structure utilized by Backed to hold U.S. treasuries indirectly purchased by borrowers on the Bloom protocol represents the best way to hold such assets until an even further decentralized solution is developed by issuers.
Please see the Risk Disclosures section in our Terms of Service for additional information on the risks associated with using the Bloom protocol. All users must agree to these terms prior to using the protocol.