> For the complete documentation index, see [llms.txt](https://docs.ethosis.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ethosis.org/risk/lessons.md). # What earlier RWA lenders got wrong Putting lending on-chain changes how settlement works. It does nothing to credit risk. Between 2022 and 2026 a series of protocols forgot this, and the record of their failures is precise. Ethosis was designed with that record open on the desk, not in defiance of it. ## Four failures ### Orthogonal Trading defaults on Maple Finance (December 2022) | | | | ------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Size of loss | Around $36M, close to 30% of Maple's book | | Events | Orthogonal Trading, borrowing from Maple's uncollateralised pools, misstated its exposure to FTX and defaulted once FTX collapsed. | | The lesson | Do not lend without collateral to a counterparty whose books you cannot see. Maple itself has since moved to about 165% collateralisation with custody-held collateral. | | Where it lives in Ethosis | Every loan is overcollateralised and the escrow contract holds the assets. No borrower disclosure is relied on, because none is required. | ### Goldfinch's borrowers (2023 to 2026) | | | | ------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Size of loss | Around $18M across Tugende, Stratos and Lend East; GFI lost 99.8% of its value; the platform went into maintenance mode in June 2026 | | Events | Borrowers in emerging markets, bound only by off-chain covenants, defaulted. Recovery was slow and incomplete; Lend East returned roughly 42%. | | The lesson | A chain cannot enforce a covenant. Recovering off-chain is a legal process that takes years. | | Where it lives in Ethosis | Recovery is a Dutch auction that any address may start and that clears in about 45 minutes. There are no covenants because nothing needs enforcing: the collateral does the enforcing. | ### Centrifuge's ConsolFreight and Harbor Trade pools (2023) | | | | ------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Size of loss | Around $4M, MakerDAO's exposure included | | Events | Trade-finance pools with concentrated obligor risk. When the obligors failed, redemptions were frozen for months. | | The lesson | Concentration is fatal, and in a pooled structure a freeze hits every participant. | | Where it lives in Ethosis | Per-token caps hold concentration down. Slices are isolated, so a single bad position freezes nothing beyond itself. With no pool there is no redemption queue to freeze. | ### The wGOOGLx exploit at Edel Finance (July 2026) | | | | ------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | | Size of loss | Around $403K of bad debt | | Events | Chainlink's oracle for tokenised Google stock was accurate. The exchange rate of a wrapper token was pushed 78 times higher and treated as collateral value. | | The lesson | Value exactly the token you hold. Every derived rate is an attack surface. | | Where it lives in Ethosis | `PriceGate` is set up with the feed for the escrowed token and nothing further. Wrappers, vault shares and derived rates are never accepted as collateral. | ## What they share Every one of these failures traces back to one of three things: lending unsecured, depending on enforcement off-chain, or valuing something other than the asset actually held. Ethosis rules out all three by design: 1. **Overcollateralised loans only**, secured by liquid, oracle-priced collateral on-chain. 2. **Smart-contract recovery only**, by auctions that need nobody's cooperation. 3. **Direct pricing only**, of the escrowed token, through guarded Chainlink feeds. The risks that remain (issuer, market gaps, sequencer, contracts) are real, and the other pages in this section document each one with its mitigation. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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