# How We Secure Your Funds

Overcollateralization, smart contract audits, and non-custodial architecture.

Security is not a feature. It's the foundation. unflat is built around multiple layers of protection to safeguard your deposit.

## Layer 1: Overcollateralized lending

Every loan in the Morpho markets that unflat uses is overcollateralized. Borrowers must lock up assets worth significantly 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 collateral falls below a safety threshold, the smart contract automatically sells the collateral to repay lenders
4. The borrower absorbs the loss, not you

This liquidation mechanism is enforced by code, not by a human decision. It runs 24/7, automatically, without exception.

## Layer 2: Smart contract audits

The smart contracts underlying Morpho Protocol have been audited by leading security firms. These audits check for:

* Vulnerabilities and potential attack vectors
* Logic errors in the code
* Edge cases that could be exploited
* Access control and permission issues

Morpho has managed over $5B in assets with zero security exploits to date.

## Layer 3: Non-custodial design

unflat is non-custodial. This means:

* **You retain ownership** of your wallet and your funds
* **unflat never holds** your assets in its own accounts
* **Your deposit goes directly** into the protocol from your wallet
* **You can verify** your position on-chain at any time

No one at unflat can move your funds. The protocol enforces the rules, not a person.

## Layer 4: On-chain transparency

Every transaction is recorded on the blockchain and can be independently verified. You don't need to take our word for it.

As we like to say: *"Please don't trust us. Verify what we're telling you."*

You can check:

* Where your funds are allocated
* How much interest you've earned
* The collateralization ratio of the lending pools
* The full history of transactions

{% hint style="danger" %}
**Important.** unflat is not a bank. Your deposits are not covered by the European Deposit Insurance Scheme (€100,000 guarantee). Despite the security layers described above, DeFi carries inherent risks. Never deposit money you cannot afford to lose. Read the [Risks and Considerations](/unflat-docs/basics/risks-and-considerations.md) section carefully.
{% endhint %}


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