How We Secure Your Funds

Overcollateralization, code audits, non-custodial architecture and optional cover.

Here is what stands between your money and a loss, layer by layer, and what each layer doesn't do.

Layer 1: Overcollateralized lending

Every loan in the Morpho markets that unflat uses is overcollateralized. Borrowers must lock up assets worth more than they borrow.

How it works:

1. A borrower wants to borrow $10,000 in USDC

2. They must lock up, say, $15,000 worth of ETH as collateral

3. If ETH's price drops and the loan passes the market's limit, a liquidator can repay the debt and take the collateral

4. The lenders are repaid

This mechanism is enforced by code, not by a human decision. It reduces the risk without removing it: if prices fall faster than liquidations, a loan can leave bad debt, and lenders take the loss.

Layer 2: Code audits

Morpho publishes the security reviews of its smart contracts in its documentation, and its core contracts can't be changed after deployment. Sherlock reviewed the unflat app's code in July 2026. Audits check for:

• Vulnerabilities and potential attack vectors

• Logic errors in the code

• Edge cases that could be exploited

• Access control and permission issues

An audit lowers the chance of a bug; it does not rule one out.

Layer 3: Non-custodial design

unflat is non-custodial software, made by unflat S.r.l. in Milan. This means:

• unflat never holds your money: it stays in a wallet only you control

• Only you sign: every transaction needs your signature

• Your wallet is built on Privy: you sign in with email, Apple or Google

• You can export your recovery key in Settings › Security. Never share it: it gives full control of your money

unflat can't recover your wallet or access your money.

Layer 4: On-chain transparency

Every transaction is recorded on the Base blockchain. Deposits, yield and cover are public, so you can check where your money is, what it has earned and the full history of transactions yourself.

Layer 5: Optional cover

On-chain cover from OpenCover · Nexus Mutual, off by default. Covered money earns a slightly lower rate. Cover is provided on a discretionary basis by Nexus Mutual, a member mutual, not as a regulated insurance contract. A 4% deductible applies, and it does not cover a de-peg of USDC. The app lists what's covered under "How coverage works".

Important. unflat is a technology platform and is not a bank or a financial intermediary. Funds deposited through unflat are not covered by deposit guarantee schemes (FITD or equivalent) and are subject to risk, including loss of principal. Never deposit money you cannot afford to lose. Read Risks and Considerations carefully.