Risk Management

To address potential risks in the system, TrustIn introduces the concept of "reserves". A portion of the accrued interest on loans is designated as reserves according to a reserve factor, to mitigate protocol losses.

$$totalReservesNew=interestAccumulated×reserveFactor+totalReserves$$

Reserves exist in the form of cTokens and the unused portion generates interest income within the protocol. cTokens obtained from liquidation are also stored in the custody contract.