Risk framework
What can go wrong, and where the exposure sits.
Separating a corporate action introduces risks that holding the underlying does not. They are worth understanding before interacting.
Issuer risk
A declared corporate action can be amended, deferred or cancelled. The protocol distributes what is delivered, not what was declared. A distribution token is a claim on an outcome, not a promise of one.
Adapter risk
Settlement depends on an adapter reporting delivery accurately. An incorrect report is the most consequential failure in the system, which is why adapters are kept small, single-purpose and separately governed, and why operator attestations are backed by stake.
Eligibility risk
EXDATE does not create a corporate-action entitlement. It depends on the tokenized stock itself conferring that right. If the underlying token does not, there is nothing for a vault to distribute.
Liquidity risk
Event-right markets are thinner than the markets for the underlying and concentrate around ex-dates. A position that is straightforward to enter may be expensive to exit.
Lock risk
A principal token cannot be redeemed for the underlying until the vault settles, unless it is recombined with matching distribution tokens. Selling the rights and then needing the underlying early means buying rights back at market.
Concentration risk
A basket concentrated in one sector or a small number of components responds to a narrower set of risks than a diversified one. Each basket publishes its component count, its largest weight and its risk level.