Risk Considerations

Understanding the potential risks associated with using Stove Protocol.

Regulatory & Compliance Risks

Tokenized equities operate within an evolving global regulatory landscape. Regulations regarding digital securities, custody, and cross-border transactions may change over time, potentially impacting:

• The availability of certain tokenized assets in specific jurisdictions

• The functionality or accessibility of mint/redeem operations

• The custody model used by partner institutions

Stove Protocol works exclusively with licensed custodians and regulated partners such as HabitTrade to maintain compliance, but users remain responsible for following their local regulations.

Oracle & Data Dependency

The Stove Protocol relies on price oracles to reflect real-world market data for tokenized assets. Although multiple oracle sources are integrated to enhance redundancy and accuracy, the following risks may still occur:

• Delayed or inaccurate price feeds may affect order settlement or valuation.

• In the event of oracle failure, temporary suspension of certain operations may occur to protect users.

The protocol includes fallback mechanisms and monitoring to minimize these risks.

Market Hours & Liquidity Timing

Traditional stock markets operate within fixed trading hours, while Stove Protocol allows 24/7 on-chain activity.

Outside regular market hours, orders may be placed and queued on-chain, but execution occurs when the underlying equity market is open.

As a result, users may observe:

• Limited or static price updates when exchanges are closed

• Liquidity differences across global trading sessions

• Deferred price execution during weekends or market holidays

Token prices may remain unchanged or reflect the last available market reference until off-chain trading resumes.

Infrastructure & Bridge Risks

Certain tokenized assets may involve cross-chain bridges or third-party custodial integrations. While these systems are carefully vetted, they inherently introduce additional risks, including:

• Smart contract vulnerabilities in bridge infrastructure

• Delays or failures in inter-chain asset transfers

• Increased complexity in asset custody and verification

Stove’s architecture minimizes dependency on third-party bridges, prioritizing direct custody-backed issuance wherever possible.

Economic & Market Risks

Tokenized stocks represent the economic performance of real-world companies and are subject to the same market forces as traditional equities.

Potential exposures include:

• Company-specific risk: operational changes, leadership shifts, or financial underperformance

• Industry risk: regulatory or technological disruptions within specific sectors

• Macroeconomic risk: global market downturns, monetary policy changes, or geopolitical tensions

• Liquidity risk: reduced secondary market depth compared to traditional exchanges

Users should perform independent due diligence and consider their risk tolerance before participating.

No Voting Rights or Shareholder Privileges

Tokenized stocks on Stove Protocol do not grant legal ownership of underlying shares. Therefore, users do not receive:

• Voting rights in corporate governance

• Shareholder benefits or other off-chain entitlements

These tokens are economic representations, not securities under Stove Protocol’s operating model.

User Responsibility Disclaimer

All interactions with Stove Protocol involve inherent DeFi and blockchain risks, including smart contract vulnerabilities, market volatility, and potential loss of funds. Users should:

• Use only trusted wallets and official interfaces

• Never share private keys or signatures

• Invest only what they can afford to lose

Stove Protocol and its foundation are not financial advisors. All content is for informational purposes only and does not constitute investment advice.

Additional Recommended Sections

1. Smart Contract Risk Disclosur

Even with audits and open-source verification, no smart contract can be guaranteed 100% risk-free. Potential issues include undiscovered vulnerabilities, dependency exploits, or blockchain-level attacks (e.g., reorgs or MEV). Stove Protocol continuously conducts audits and bug bounties to mitigate these risks.

2. Insurance & Contingency Measures

The Stove Foundation maintains a transparent vault structure and is exploring potential insurance coverage partnerships. In extreme scenarios (e.g., custodian insolvency or smart contract failure), recovery procedures will follow foundation governance protocol.