> For the complete documentation index, see [llms.txt](https://kaiainvestmentpartners.gitbook.io/kaiainvestmentpartners-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kaiainvestmentpartners.gitbook.io/kaiainvestmentpartners-docs/legal-and-disclosures/risk-disclosure.md). # Risk Disclosure {% hint style="danger" %} Investing in tokenized products involves a high degree of risk, including the possible total loss of invested capital. Investors should understand these risks before participating. The full risk disclosure is set out in the relevant product documentation, and any investment decision should be based on a consideration of that documentation as a whole. {% endhint %} This section describes risks that are generally inherent to tokenized products and is provided for illustrative and explanatory purposes only. For a complete and product-specific disclosure of risks, review the risk factors in the product documentation applicable to the relevant product. ## 1. Performance Risk The value of a tokenized product can fall, including to zero. Past performance is not indicative of future results. Returns depend on the performance of the underlying assets or strategy, including the following: * **Strategy risk.** Different products follow different strategies, each with its own risk profile. Strategies may be exposed to liquidity constraints and changing market conditions, which can affect the underlying assets and lead to a loss of principal. * **Market conditions.** The value of underlying assets follows market movements and may be affected by macroeconomic events, regulatory change, and shifts in market sentiment. Downturns or liquidity shocks may reduce returns and may prevent redemption at expected values. * **Counterparty risk.** Performance may depend on third parties, including exchanges, DeFi protocols, custodians, and stablecoin issuers. The failure or insolvency of a counterparty may reduce liquidity or cause loss. * **Manager risk.** Outcomes depend on the manager's systems and discretionary decisions. Operational failures, or errors in risk management or strategy, may adversely affect value. * **Execution risk.** Delays or technical failures in implementing a strategy may lead to sub-optimal performance and loss, even where automated systems are used. ## 2. Duration and Liquidity Risk A tokenized product may not have a fixed maturity date, and a token may not be redeemable on demand. Value may be realizable only through redemption against available vault liquidity, through transfer to an eligible holder, or through product-level redemption. There may be no established trading market, and there is no assurance that one will develop. Where an instant or accelerated redemption feature is offered, its availability is not guaranteed. ## 3. Blockchain, Smart Contract, and Wallet Risk Tokenized products depend on blockchain networks and smart contracts. Network malfunction, forks, or discontinuation of an underlying blockchain may affect their functionality and value. Defects, bugs, or errors in smart contracts may cause failure or loss of assets. Underlying assets and counterparties may themselves be exposed to similar risks. Loss of the private keys to a wallet will result in the irreversible loss of the tokens held. ## 4. NAV and Valuation Risk The net asset value (NAV) of a tokenized product may rely on third-party data and valuation methodologies. Published values may differ from prices on other venues and may be delayed or based on estimates during periods of market volatility. ## 5. Credit Risk Investors may be exposed to the creditworthiness of the issuer of a tokenized product and of the parties associated with the underlying assets. Default by any such party may result in partial or total loss. Specific terms are set out in the applicable product documentation. ## 6. Regulatory Risk Tokenized products and the underlying distributed ledger technology are subject to an evolving and uncertain regulatory environment that varies by jurisdiction. Future laws, licensing requirements, or enforcement actions could restrict operations, require changes, or render activities commercially unviable in certain jurisdictions. Yield-generating structures could be reclassified under investment or securities regulation. Such changes may affect a product's marketability and tax treatment, and an investor's ability to buy, hold, or sell. --- # Agent Instructions This documentation is published with GitBook. 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