Risks

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Smart Contract Risks

The core protocol logic is implemented in the L2PassOvernightYield.sol smart contract deployed on the TRON network. The contract follows established security best practices and a modular design. As with all smart contracts, there is a residual risk that unforeseen issues in logic, accounting, or external integrations could affect protocol behavior or user funds. Continuous testing and conservative design choices are used to reduce these risks as much as possible.

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User Access Risks

L2Pass is fully non-custodial. Users retain full control of their assets at all times. As a result, access to funds depends entirely on the security of the user’s private keys. If a wallet becomes inaccessible, the associated staking position cannot be migrated to a new address, and funds may not be recoverable.

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Third-Party Smart Contract Risks

The protocol integrates with external smart contracts such as JustLend and the USDD Peg Stability Module. The operation and security of these systems are outside the direct control of L2Pass. Changes in logic, upgrades, or unexpected issues within these third-party contracts could impact protocol functionality or yields. All integrated protocols have undergone independent security audits. Audit reports for JustLend and the USDD PSM are publicly available.

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Financial and Market Risks

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Stablecoin Stability

The protocol utilizes USDT and USDD. The value of a user’s position depends on the stability of these assets. The system assumes a near 1:1 exchange rate between USDT and USDD through the PSM. A prolonged deviation from this parity could affect withdrawal outcomes or asset value. Both stablecoins are also subject to the operational, financial, and regulatory risks of their respective issuers.

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Yield Variability

Yield is variable and not guaranteed. Returns are driven by borrowing demand on JustLend and, where applicable, external incentive programs. These rates are market-based and may fluctuate over time, including decreasing significantly or temporarily reaching zero.

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Withdrawal Liquidity

Standard withdrawals rely on available USDT liquidity in the USDD PSM. In periods where PSM liquidity is limited, standard withdrawals may not be immediately available. To provide flexibility, the protocol supports a Direct Withdrawal option that returns USDD instead. Users choosing this option are responsible for managing or converting the USDD asset independently.

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Operational and Governance Risks

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Administrative Roles

The protocol uses a role-based governance model to support safe operation and maintenance:

• DEFAULT_ADMIN_ROLE
  Responsible for updating core integrations such as the PSM and JustLend, adjusting fee parameters, and managing protocol roles.
• MANAGER_ROLE
  Authorized to pause or resume protocol operations and withdraw accrued protocol fees.

While these roles are designed for maintenance and risk management, misuse or compromised administrative keys could result in temporary disruption or unintended fund movements.

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Reward Finalization

Rewards accrue continuously but are finalized on a weekly epoch basis. The interface displays real-time reward estimates for transparency. Final reward amounts are confirmed on-chain only after the epoch is completed and settled.

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Network Execution

All interactions occur on the TRON network and require sufficient Energy and Bandwidth. Periods of network congestion or increased resource costs may result in delayed or failed transactions, or higher execution costs for users.

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Support & Community

For technical inquiries regarding security or protocol mechanics, please join our official Telegram community.