> For the complete documentation index, see [llms.txt](https://docs.obligate.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.obligate.com/obligate/risks.md).

# Risks

Involved in the eNotes and other debt instruments, such as the eTrackers.

**Disclaimer**: Before investing, it is essential for potential investors to understand and evaluate the associated risks. As with all financial decisions, prospective investors should consult their own legal, financial, tax, and technical advisers before making an investment decision.

## Issuer default risk

There is always a risk that the issuer may default on its obligation to repay eNotes or to make scheduled interest payments. Such defaults might occur due to insolvency, financial hardships, regulatory actions, or other unforeseen circumstances.

## Collateral risk (for secured issuances)

In instances where the eNote issuance is secured by collateral, there is a risk that the collateral may default or become worthless. The value of the collateral might decline due to market volatility, regulatory actions, or other factors that affect the worth of the underlying asset. If the issuer defaults and the collateral is insufficient to cover the eNotes’ value, investors may not recover their full investment.

## Fraud risk

The issuer could act in a fraudulent manner, either by consciously violating the terms of the eNote terms and conditions, or by falsifying documentation, including such related to the collateral.

## Blockchain technology risk

The blockchain technology that underpins the eNotes is subject to both known and unknown risks. These might include potential vulnerabilities in the blockchain protocol, susceptibility to attacks, or unanticipated changes in the operation of the blockchain. Such events might disrupt the normal functioning of the eNotes or lead to loss of funds. The blockchain upon which the eNotes are issued might also undergo a "fork” where the chain splits into two or more paths. This can create ambiguity regarding bond ownership, rights, and value on each forked path.

## Smart contract and application risk

Smart contracts are self-executing computer programs with the terms of the agreement written directly into the code. They provide tamper-proof and enforceable agreements, but also have inherent risks due to their nature and how they function.

Applications or smart contracts that interact with or govern the functioning of the eNotes could have inherent vulnerabilities or operational issues. These might arise from programming errors, external attacks, or unanticipated user behaviors. Any malfunction or vulnerability in these applications could jeopardize the eNotes’ integrity or the security of the funds.

## Private key risk

The Parties are responsible for securely storing and managing their private keys, which grant access to their eNote holdings on the blockchain. Loss or theft of a private key can result in an irreversible loss of the eNotes or funds associated with them. Neither the issuer nor any third party will be able to restore or replace lost tokens. Investors are responsible for adopting robust security and custody measures.

## Legal and regulatory risk

The legal and regulatory treatment of blockchain-based debt securities, including the eNotes and the eTrackers, is still evolving and may change in the future. Enforceability of rights of investors holding these instruments may therefore be impacted subject to local legal and regulatory developments. In addition, future regulatory actions and/or court decisions could restrict, suspend, or prohibit the issuance, trading, or redemption of the eNotes and the eTracker. Such actions could have a material adverse effect on the liquidity, value, or enforceability of investors’ rights.

## Liquidity risk

There is a risk that eNote holders may not be able to liquidate their holdings easily, especially if there is insufficient market interest. A lack of liquidity could lead to significant price volatility or the inability to sell the eNote at a desirable price.