All assets under Outlet’s management are 100% covered. Coverage is different from insurance. We are not FDIC insured, but have the best available coverage on the assets deposited through Outlet. You can read below for more information on how your funds are protected while using Outlet. Outlet uses many partners, one of them is a custody solution. This means that Outlet does not directly hold your funds, these funds are instead held by our custody partner. Our custody partner provides SOC II type 2 security. The coverage that we have on Outlet is the best coverage available for your digital assets.
At Outlet the most important thing is protecting your assets. We protect and guard your assets under the following risks, lending risk, the risk of hacks, and money in transit.
We have a direct partnership with one of our lending partners to make Outlet as safe as possible from hacks. Our custody solution partner is SOC II type 2 approved. This is a great article that goes into detail about how strict, and what the SOC verification process is like. Stock markets, exchanges and other regulated entities have similar SOC requirements that must be met in order to operate.
Funds are stored by Fireblocks which also protects you against Outlet going out of business, shutting down, or disappearing with your funds.
Lending risks are mitigated due to the fact that the loans your money goes toward backing are all overcollateralized. Meaning that for every dollar our lending partners loan out there is over a dollar being held by them.
Let’s follow this example on how lending risks are mitigated. You give Outlet $100. We then give this money to our lending partner who has a loan with collateral worth $130. If the collateral price were to dip below the $100 + the rewarded interest we liquidate the loan, and make sure that the lender (Outlet user) is made whole. This ensures that any funds loaned on Outlet are safe from default.