Loss Reserve

At cSigma, we prioritize the security of our lenders' capital. To safeguard against potential risks, we have established a protocol loss reserve of 100 million SIGMA tokens designed to protect lenders in the event of borrower defaults or unforeseen financial events within a pool.

How Does it Work?

In the event that a borrower defaults and the pool's liquidity is insufficient to cover lender withdrawals, the loss reserve will step in to help cover the shortfall. This ensures that lenders have added protection, reducing the risk of significant capital loss.

The protocol loss reserve is continuously monitored to ensure it remains adequate to support lenders across all pools. By maintaining this reserve, we aim to build a more resilient system that can weather unexpected events while maintaining confidence in the platform’s stability.

Key Points:

• 100 million SIGMA tokens are set aside as a loss reserve.

• The reserve is used to cover lender losses if a pool experiences defaults.

• The reserve provides an additional layer of protection, beyond borrower collateral.

• cSigma monitors the reserve to ensure it is sufficient for covering potential losses