# Vulnerability of Stablecoins like cUSD **URL:** \ **Category:** Governance\ **Created:** [May 11, 2022, 11:58am UTC](https://forum.celo.org/t/vulnerability-of-stablecoins-like-cusd/3526 "2022-05-11T11:58:56Z")\ **Posts on this page:** 1\ **Showing post:** 6
**Author:** ![Pinotio.com](https://sea2.discourse-cdn.com/flex020/user_avatar/forum.celo.org/pinotio.com/32/264_2.png) [@Pinotio.com](https://forum.celo.org/u/Pinotio.com)\ **Post date:** [May 11, 2022, 2:10pm UTC](https://forum.celo.org/t/vulnerability-of-stablecoins-like-cusd/3526/6 "2022-05-11T14:10:53Z")
Hello @Bab . The Celo Reserve does have collateral backing cStables. [CeloReserve.org](http://CeloReserve.org) is a good way to track this. In short, at the current level of BTC, ETH and Celo - the outstanding amount of stables has multiples of collateral - a significant difference to Terra. However, there is no guarantee that stables are safe in all market conditions. There is risk. Personally, I do not hold nor recommend holding any more than a tiny amount of cStables (or any stables for that matter). What would happen in the case of further drops in crypto price has been the subject of much discussion. See here for some threads: > [@Celo Reserve Collateralisation](https://forum.celo.org/t/celo-reserve-collateralisation/780): > > @asa , following the recent governance discussion and mention of 10X collateralisation levels, I’m doing a deeper post on collaterisation and ideas for metrics we may feel are valuable to track. Summary I’ve calculated the current collateralisation of cUSD based on BTC/ETH lows in March 2020. In such a scenario, cUSD is under-collatateralised by 65%+ when one excludes the value of cGLD. I propose three collateralisation metrics to monitor: a) BTC/ETH collateralisation, b) stablecoin collatera… > [@Celo Reserve Liquidation Mechanism](https://forum.celo.org/t/celo-reserve-liquidation-mechanism/2552): > > Hi folks, I’ve been involved in this forum for almost a year now, and am building Celo.Tax . Summary I see a risk that Celo stables get undercollaterised in the case of a market crash. Adding an automated reserve liquidation mechanism would provide significantly increased security for cStables. I would like to consider proposing a CGP to direct efforts towards how such a mechanism might be implemented (or even better, propose a CGP to add automated reserve liquidation - it’s just I need techn… > [@Upcoming CGP: Increase target level of stable holdings in the reserve](https://forum.celo.org/t/upcoming-cgp-increase-target-level-of-stable-holdings-in-the-reserve/3380): > > Author(s): Ronan McGovern (@Pinotio.com), Roman Croessman (@roman) + keen to welcome further collaborators/proposers Summary The proposal increases reserve holdings of stablecoins, specifically DAI, in the short-to-medium term, and then phases stablecoins out as natural backed capital is introduced. This proposal increases the percentage of stable collateral in the reserve to better protect against cStable under-collateralization in the case of a crypto market crash. In the short term, this p… Generally, my personal view is that Celo has been a lot more conservative than platforms like Terra - both in providing collateral for stables, and having a much slower growth in supply of cStables. Still, there are risks. There are not simple solutions. [Mento 2.0](https://forum.celo.org/t/towards-mento-2-0/3473) includes plans for some improvements. I continue to see this as a high risk and priority for Celo to address. --- _[View the full topic](https://forum.celo.org/t/vulnerability-of-stablecoins-like-cusd/3526)._