> ## Documentation Index > Fetch the complete documentation index at: https://docs.edel.finance/llms.txt > Use this file to discover all available pages before exploring further. # Risk Disclosure Statement > Comprehensive risk disclosure for Edel Finance Platform users covering DeFi, market, technology, and regulatory risks Risk disclosure statement covering DeFi, market, and regulatory risks For any questions, join the Edel Finance Discord, and reach out to contributors. **Last Updated: 9 September 2025**\ The following Risk Disclosure Statement is intended to inform you ("**User**") of the potential risks associated with interacting with the Edel Finance Platform ("**Platform**"), which operates within the decentralised finance (DeFi) sector. By engaging with the **Platform**, **Users** acknowledge, understand, and accept the risks outlined below. This statement does not cover all possible risks, and **Users** are encouraged to consult with financial, legal, and technical advisors before using the **Platform**. ## 1. General Platform Risks ### Decentralised Finance and Blockchain Risks The **Platform** operates on a blockchain-based infrastructure, which may expose **Users** to specific risks associated with blockchain technology and DeFi protocols. These risks include but are not limited to potential issues with **smart contracts**, decentralised governance, transaction finality, and blockchain network reliability. **Users** should understand that blockchain-based services differ significantly from traditional finance and are still in a developmental stage. ### Platform "As-Is" Basis The **Platform** and its services are provided on an "as-is" and "as-available" basis, without any warranties, express or implied. The **Platform** makes no guarantees regarding functionality, performance, reliability, security, or accuracy, and disclaims any liability for losses or damages arising from service unavailability or performance issues. ## 2. Financial and Market Risks ### Market Volatility The value of digital assets, tokenized stocks, and Real World Assets (RWAs) is subject to extreme volatility. Price fluctuations in crypto-assets, tokenized securities, and collateral values may occur suddenly and without warning, leading to substantial and unpredictable changes in the value of **User** holdings. **Users** should be prepared for rapid changes in market conditions that could affect the performance of transactions conducted on the **Platform**. ### Liquidation and Collateral Risks **Users** engaging in borrowing activities must monitor their **collateral** levels and **Health Factor** carefully. Failure to maintain sufficient **collateral** may result in automatic liquidation when the **Health Factor** drops below 1.0, leading to partial or total loss of the **User**'s collateralised assets without recourse. Liquidation can occur due to **collateral** value decreases, accrued interest on borrowed amounts, or a combination of both factors. ### Liquidity Risks Digital asset markets, including those involving tokenized stocks, RWAs, and the **Platform**'s supported assets, may experience low liquidity. Limited liquidity can prevent **Users** from exiting positions or converting assets in a timely manner, potentially resulting in financial losses. **Users** should consider their ability to manage positions in low-liquidity conditions. ### Tokenized Securities and RWA Risks The **Platform** enables lending and borrowing of tokenized stocks and Real World Assets, which carry additional risks including: * Price correlation with underlying traditional securities * Regulatory changes affecting tokenized asset validity * Bridge or custodian risks for underlying asset backing * Settlement timing differences between traditional and tokenized markets * Potential depegging from underlying asset values ## 3. Technology and Security Risks ### Smart Contract Risks The **Platform** relies on **smart contracts** deployed on the Ethereum blockchain, built on the Aave V3 architecture. While the **Platform** leverages battle-tested and extensively audited **smart contracts**, vulnerabilities or coding errors may still exist. **Users** acknowledge that interactions with **smart contracts** are at their own risk, and the **Platform** is not liable for losses resulting from **smart contract** malfunctions, coding errors, or exploits. ### Oracle Risks The **Platform** relies on Chainlink's decentralized oracle network and other oracle services to provide accurate price feeds for assets. Oracle failures, manipulation, or temporary unavailability could result in incorrect asset valuations, potentially triggering unwarranted liquidations or preventing normal protocol operations. ### Cybersecurity Risks The **Platform** may be exposed to cybersecurity threats, including but not limited to hacking, phishing, denial-of-service (DoS) attacks, and other forms of unauthorised access. Despite the implementation of industry-standard security protocols, **Users** recognise that no platform is immune to security breaches. Any unauthorised access to **User** accounts or transactions may result in financial loss, and **Users** are advised to employ strong security practices, including protecting private keys and using secure wallet providers. ### Blockchain Network Risks The **Platform** operates on the Ethereum blockchain, which is subject to network-specific risks, including congestion, high transaction fees, potential downtime, and network reorganisation. **Users** should understand that blockchain network conditions may impact the timeliness, cost, and success of transactions on the **Platform**. The **Platform** disclaims responsibility for any losses arising from blockchain network-related issues. ### Irreversibility of Transactions Blockchain transactions executed on the **Platform** are final and cannot be reversed once confirmed. **Users** are solely responsible for verifying transaction details before confirming them, as the **Platform** cannot alter or cancel transactions once submitted. ## 4. Regulatory and Legal Risks ### Evolving Legal and Regulatory Landscape The legal and regulatory environment surrounding DeFi platforms, crypto-assets, tokenized securities, and RWAs is rapidly evolving and may vary significantly across jurisdictions. **Users** should be aware that future regulatory actions could adversely affect their ability to use the **Platform** or hold certain assets. The **Platform** disclaims liability for losses or legal consequences arising from changes in laws, regulations, or regulatory interpretations affecting the **Platform** or its **Users**. ### Securities Law Compliance The **Platform**'s focus on tokenized stocks and securities lending markets may subject **Users** to additional regulatory requirements. **Users** are responsible for ensuring their activities comply with applicable securities laws in their jurisdiction, including but not limited to registration requirements, disclosure obligations, and investment restrictions. ### Jurisdictional Restrictions The **Platform** may restrict access to **Users** in certain jurisdictions where the use of crypto-assets, tokenized securities, or DeFi platforms is prohibited or highly regulated. **Users** are responsible for understanding and complying with the legal requirements of their jurisdiction before using the **Platform**. The **Platform** reserves the right to implement restrictions based on **Users**' location as required to comply with applicable regulations. ### Tax Obligations **Users** are solely responsible for determining and fulfilling their tax obligations related to transactions conducted on the **Platform**, including those involving tokenized securities and RWAs. The **Platform** does not provide tax advice, and **Users** are advised to consult with tax professionals to understand and comply with their local tax laws. ## 5. User Responsibility and Knowledge Assumption ### User Diligence **Users** are expected to conduct independent research and due diligence before engaging with the **Platform**. **Users** should understand the functionality and risks of DeFi platforms, **smart contracts**, blockchain technology, digital assets, tokenized securities, and RWAs. The **Platform** is not liable for losses resulting from the **User**'s lack of knowledge or understanding of these subjects. ### No Financial Advice The **Platform** does not provide investment, financial, legal, or tax advice. All information available on the **Platform** is for informational purposes only. **Users** are encouraged to seek professional advice before making any financial decisions or engaging in transactions on the **Platform**. ### Self-custody and Private Key Management **Users** are solely responsible for the custody and security of their blockchain-based wallets and private keys. The **Platform** does not store, control, or manage private keys on behalf of **Users**. Loss of a private key or access credentials may result in the permanent loss of crypto assets, and the **Platform** is not responsible for any such loss. ## 6. Operational Risks ### Platform Stability As a decentralised platform, Edel Finance is subject to operational risks that may impact service availability. Maintenance, upgrades, or unexpected technical issues may temporarily disrupt the availability of **Platform** services. The **Platform** disclaims responsibility for losses incurred due to downtime, maintenance periods, or other interruptions in service. ### Third-Party Service Dependencies The **Platform** may depend on third-party providers for wallet integration, blockchain infrastructure, oracle services, analytics, and tokenized asset custody/bridging services. Disruptions in these services could affect **Platform** functionality and **User** experience. **Users** acknowledge that the **Platform** is not liable for any losses caused by third-party service failures. ### Forks and Protocol Changes Blockchain networks are subject to potential forks, upgrades, or changes to the underlying protocol. These events could impact the functionality, value, or accessibility of assets on the **Platform**. The **Platform** is not liable for losses arising from network forks, protocol changes, or incompatibility issues following such events. ## 7. Specific Risks Related to Platform Architecture and Development ### Aave V3 Protocol Foundation Edel Finance is built on the Aave V3 architecture, leveraging battle-tested **smart contracts** for overcollateralized lending and borrowing. While this provides proven infrastructure, **Users** should understand that any modifications or customizations to the base protocol may introduce unforeseen risks, including vulnerabilities or deviations from the original protocol's intended functionality. The **Platform** disclaims liability for losses arising from protocol modifications. ### Governance and Decision-Making Edel Finance may implement a decentralised or community-based governance model, wherein token holders may vote on or propose changes to the **Platform**. Governance changes may affect **Platform** features, fees, risk parameters, and other operational aspects, which may in turn impact **Users**' positions. **Users** acknowledge that governance outcomes are determined by token-holder votes and may not always align with individual interests. ### Risk Parameter Adjustments The **Platform**'s risk management framework includes dynamic risk parameters that can be adjusted through governance or automated systems to respond to changing market conditions. Changes to Loan-to-Value ratios, liquidation thresholds, interest rate models, and supply/borrow caps may affect existing positions and future **Platform** interactions. ### Updates and Feature Changes The **Platform** may introduce new features, integrate additional assets, or make updates to existing functionality. **Users** should be aware that new updates may alter the **Platform**'s functionality and risk profile. The **Platform** reserves the right to make such changes and disclaims responsibility for any adverse impacts resulting from updates or feature modifications. ## 8. Acknowledgement of Risk and No Recourse By using the **Platform**, **Users** acknowledge and accept all risks associated with their activities on the **Platform** and understand that the **Platform** is not liable for any financial losses, damages, or legal consequences resulting from the risks described in this Risk Disclosure Statement or other unforeseen circumstances. **Users** waive any claim or recourse against the **Platform** in connection with their use of the **Platform**.