The “Bank Run” Event, a Potential Liquidity Risk

In the case of a "Bank Run," which occurs when a large number of depositors rush to withdraw their funds from the custodian institution due to concerns about its solvency or stability, we remain committed to our obligations as a company, providing transparency and trust to our investors. We are always prepared to respond effectively, thanks to our risk management mechanisms:

Our liquidity pool serves as an over-collateralization for our stored diamond value and our liquid assets reserve ratio of 20% is much larger than the one set by the Fed for the majority of US banks Besides that, our DD Company Wallet operates for covering DD acquisitions, potential token-burning events or partially staking. Both mechanisms also serve as buffers to absorb rapid changes or actions that may introduce certain risks to our stored values or necessitate a high number of redemptions claimed by users. As an additional measure for risk absorption, our company will reinvest to provide needed liquidity for certain situations.

We acknowledge that our diamond reserve may appear less liquid compared to our dollar reserve. However, thanks to Diment's strong network within the diamond industry and collaborations with reputable diamond trading firms, we can enhance the liquidity of diamonds, making them nearly as readily tradable as cash. This means that during periods of extreme redemption, Diment can initiate a gradual liquidation of the diamond reserve to meet its commitments to its investors.

Consequently, our company will implement token-burning events to rebalance the token supply and fulfill its commitments to the market.