Fund Documents · 06 of 08

Risk Factors

Everything below is a real way to lose money. None of it is hypothetical.

1. Pool depth¶

The canonical pool opens at roughly 15,000 USDG and 5,000 RPT a side at the offering cap, and smaller at a smaller raise. A trade of a few thousand USDG will move the price by whole percentage points. The protocol's own operations are protected by TWAP-deviation and clip-size bounds; your trades are not. Price impact is your cost, and it is disclosed here rather than smoothed.

2. The premium can collapse, and distributions with it¶

The distribution rate is a formula of the market premium over NAV. At or below NAV the rate is zero, and it stays zero until the market pays a premium again. The APY figures in the mechanism table are arithmetic under an assumption the market controls. A share bought at a premium, in the founding offering or later, can lose the premium entirely and still be a fully backed share: that is the design working, and it is also a loss.

3. The floor is patient, not instant¶

The restore point buys at most 1% of liquid reserves per 8-hour epoch. In a sustained sell-off, the market price can sit below NAV − 1.5% for days while the bid works through capacity. The floor is a reserve fact and a rate-limited bid; it is not a promise that you can exit at NAV at any moment.

4. No governance means no fixes¶

There are no owner functions on the emissions path and no parameter-change path short of redeployment. If a constant turns out to be wrong for the market, nobody can change it. If a bug is found, nobody can patch it in place. The only remedy for either is a new deployment and voluntary migration. "There will be no service pack" is a promise about integrity, and it cuts both ways.

5. Safe Mode and liveness¶

If the price oracle goes stale, minting and market operations halt until someone checkpoints the pair and 30 minutes pass. Every entrypoint is permissionless, so anyone can do this, and the fund runs bots as a convenience. But if nobody does, distributions are skipped and the restore point does not settle. A skipped epoch is never made up.

6. Smart-contract risk, and provenance¶

The core contracts are a redeployment of the NetNet Capital Management protocol contracts, unmodified, which are themselves a modern rebuild of the OlympusDAO v1 architecture. Audit status of this deployment: audit report link, or a plain statement that none exists. Reusing code that runs elsewhere reduces the chance of a novel bug; it does not remove it, and it does not make this deployment's configuration correct. The Morpho market that earns yield on reserves, the USDG contracts, the Uniswap v2 deployment and Robinhood Chain itself are all additional smart-contract and operational dependencies outside the fund's control.

7. The reserve asset¶

RPT is backed by USDG, a stablecoin issued by a third party. The 1 USDG floor is exactly as good as USDG. Issuer risk, redemption risk, regulatory action against the issuer and any depeg pass straight through to backing.

8. The fee can be bypassed¶

Anyone can create an unmapped pool on Uniswap v3, v4 or UniswapX. Trades there pay no fee until the pool is discovered and mapped. The fee is a structural inflow the fund expects, not one it can guarantee.

9. Key custody¶

The fee-mapping key is the protocol's only permissioned surface, and its powers are narrow and add-only. A compromised key could map a legitimate pool early (harmless) or queue a fee exemption (timelocked and visible). It cannot touch reserves, emissions or the floor. Its configuration is published under Trading Fee Schedule, and if it is a single signer, that is a weakness, not a feature.

10. Management options¶

Up to 15% of float can be issued to management at a 1 USDG strike. Exercise steps the premium down. Exercised shares are ordinary RPT and, absent the policy under Management Compensation, could be sold on the market.

11. Chain and sequencer¶

Robinhood Chain is an Arbitrum Orbit L2 with a known sequencer. Sequencer downtime pauses everything, including checkpoints and restore-point settlement. Timestamp manipulation by a chain operator is a disclosed residual trust assumption of any TWAP-based system.

12. Legal, regulatory and tax¶

These documents use fund vocabulary as a matter of style. RPT may be treated as a security, a commodity or something else depending on where you are, and that treatment can change. Distributions may be taxable when received, not when sold. Nothing here is legal or tax advice; the fund has no relationship with you that would make it responsible for either.

13. What Edition N does not have¶

This deployment has no prize draws, no pack desks, no games and no leverage facility, so it does not carry the risks those programs would bring. It also does not carry any benefit they might have provided: no reserve outside backing exists to be deployed in a crisis, because no such reserve exists at all. The floor is the reserves, and the reserves are what is on the holdings table.