Risks

nTokens were built to be an extremely safe assets. This page provides transparency on the risks involved and the mitigating strategies Num Finance takes to reduce such risks. This disclosure can help current and prospective nTokens holders understand their risk level compared to other on and off-chain alternatives. Users should do their own research when deciding to purchase any digital asset. If you have questions about these risks, please contact us at [e-mail].

Collateral/solvency

Each nTokens Reserves are invested only in 1 single kind underlying financial asset, including:

• iShares $ Treasury Bond 0-1yr UCITS ETF (nTBILL1) - Fact Sheet

• iShares Core S&P 500 UCITS ETF (nSP500) - Fact Sheet

• iShares Diversified Commodity Swap UCITS ETF (nICOM) - Fact Sheet

• iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF (nEM) - Fact Sheet

The above assets are considered shallow risk, with a AAA rating. However, these assets rely on the US continuing to service its debt.

Liquidity

Mint delays

The Mint process can take up to 48 business hours of delay. This is because the interactions we need to have with partners like the Broker to acquire the shares of a ETF.

Non-endorsement of 3rd party protocols

Due to the permissionless nature of nTokens as an ERC20 token, we expect protocols to build with nTokens. This does not mean an endorsement of such protocols, and users should do their own research before interacting with such protocols. Although Num Finance may engage in co-marketing campaigns with other protocols, such marketing does not endorse the safe use of those platforms. It should not be seen as a guarantee of the safety of such protocols. The Company will not be liable for losses related to using nTokens in 3rd party protocols, including hacks or any other losses that could materialize.

Performance

Performance results of the underlying asset and their underlying holdings are solely the results of the applicable underlying asset and its underlying holdings. No representation is being made that any nTokens will or is likely to achieve profits or losses similar to those shown.

Digital assets

Blockchain

Transactions in the blockchain are irreversible. This means that once you submit an order, whether in the Num Finance platform or the blockchain, the Company or the network will execute such an order on your behalf. The Company is not responsible for losses related to errors in orders initiated by users.

Authentication and private keys

Users are the sole responsible for keeping their platform credentials and private keys secure. Users are also responsible for other users they share those credentials too, whether that is by adding additional users to the platform or by sharing signing privileges. The Company is not responsible for losses arising from login credential security compromises, transactions initiated by users added by the account opener, or loss or mismanagement of private keys.

Technology

Num Finance's technology was designed to minimize the surface area for attacks. In the front, the smart contract is a simple ERC20, audited, and battle-tested contract. In the back, Num Finance leverages banking-grade technology, protected from external access, making it hard for attackers to penetrate.

Smart contract

The nTokens smart contract, is a modified version of the battle-tested ERC20 canonical implementation to enable rebasing and has been audited by Coinspect a leading audit firm. However, no software product is ever risk-free. The nTokens smart contract is public; more information can be found here. The Company suggests that users conduct their own research before purchasing any digital assets, including nTokens.

Backend

Num Finance's backend is secured from external actors and leverages banking-grade technology to minimize risks. This includes Traditional Finance partners operating on reversible networks with decades of experience and billions in transactions, as well as more digital asset custody providers (Fireblocks) that ensure proper custody of digital assets. Despite using banking-grade secure partners, users should know that using any centralized provider carries risks.

Management and Directors

At Num Finance, we acknowledge that centralized protocols require higher trust assumptions than those necessary for decentralized protocols, especially for Management and Directors of the Company. The Company implements several strategies to reduce the risks arising from the need to trust humans, which include:

• A bankruptcy-remote "nTokens Reserve" setup.

• Proof of reserves and periodic attestations.

• Delegation of management of nTokens Reserves to licensed Investment Manager.

• Whitelisting bank accounts where nTokens Reserves can be transferred to.

• Public disclosure of Directors and Management identities.

Regardless of these measures, risks related to centralized systems will always exist. As such, users should do their own research and assess risk-reward levels associated with using a centralized protocol.

If you have suggestions on how to further mitigate nTokens risks or any other aspect of the management of nTokens in general, please contact us at [e-mail].