Key Risk Categories & Mitigation Strategies
Key Risk Categories & Mitigation Strategies
1. Financial Risks
Market Volatility Real estate valuations may fluctuate due to macroeconomic shifts, seasonal tourism cycles, and geopolitical shocks.
Mitigation:
Portfolio-level diversification across uncorrelated resort markets
Emphasis on yield-generating hospitality assets with historically resilient demand
Liquidity Risk While tokenization enhances flexibility, secondary market depth may vary over time.
Mitigation:
Listings on both DEXs and CEXs to broaden investor access
Tiered exit mechanisms and lock-up periods to prevent panic-driven selloffs
Transparent, methodology-driven NAV disclosures to support price discovery
Currency Exposure Investors may face FX-related risks when holding assets denominated in foreign currencies.
Mitigation:
All investor distributions paid in stablecoin (USDC)
Local hedging strategies where feasible to reduce FX volatility
2. Operational Risks
Property Oversight Substandard management can erode yield, degrade guest experience, and impair asset value.
Mitigation:
Pre-vetted, exclusive partnerships with experienced, locally-based operators
Clearly defined SLAs embedded in operator agreements
Quarterly performance audits and third-party operational reviews
Platform Infrastructure Smart contract bugs, cyberattacks, or protocol vulnerabilities could compromise investor assets.
Mitigation:
Deployment of audited, upgradeable smart contracts (ERC-1404)
Infrastructure built on the Polygon network for low-cost, high-throughput performance
Continuous monitoring, third-party audits, and routine penetration testing
3. Entity & Counterparty Risk
SPV Insolvency An SPV holding the real estate asset may enter financial distress due to unforeseen liabilities or market disruptions.
Mitigation:
Each resort is held in a ring-fenced SPV with no interdependence
No cross-collateralization across properties or platforms
Investors hold direct equity rights in the underlying asset through digital securities
Platform-Level Risk (OASES) In the unlikely event of a platform failure or operational shutdown, investor capital continuity must be ensured.
Mitigation:
Ownership and investor rights enforced through on-chain smart contracts
Redundancy via mirrored off-chain legal documentation and custodial recordkeeping
Smart contract logic includes fallbacks to trigger liquidation and disbursement in force majeure scenarios
4. Market & Regulatory Risk
Macroeconomic Shocks Broad trends such as inflation, recessionary cycles, or travel restrictions may reduce profitability.
Mitigation:
Conservative underwriting with stress-tested forecasts
Focus on resorts with strong seasonal resilience and repeat guest demand
Dynamic pricing models to adjust for shifting market conditions
Legal and Regulatory Exposure Changes in securities law, tax regulations, or tokenization policy may impact platform operations or investor eligibility.
Mitigation:
Ongoing legal oversight across all active jurisdictions
Jurisdiction-specific SPVs and legal counsel engaged for each asset
Full adherence to Reg D 506(c), Reg S, KYC/AML, and FATF guidelines
Active monitoring of emerging VASP regulations, including MiCA, and SEC directives
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