Risks

Risk Overview for Participants

Risks and Considerations

Engaging with Delta Money offers the potential for attractive yield and diversified exposure to digital asset strategies. However, as with any investment in decentralized finance (DeFi), participation carries inherent risks. These risks should be understood within the broader context of Delta Money’s robust risk management practices, which include diversified strategy design, capital buffers, insurance reserves, and ongoing monitoring of both internal and external dependencies.

While these measures are designed to mitigate risk and promote long-term sustainability, they do not fully eliminate the possibility of financial loss. Delta Money is not a bank or a regulated financial institution, and deposits are not insured by any governmental or regulatory body. Users should carefully evaluate their individual risk tolerance before participating.

The following outlines key categories of risk associated with Delta Money. The list is not exhaustive, and the order does not indicate the relative likelihood or severity of each item.

Primary Risk Categories

1

Smart Contract & Technical Infrastructure Risk

• Smart Contract Vulnerability While all protocol contracts are subject to rigorous third-party audits and continuous on-chain monitoring, the possibility of undetected vulnerabilities remains. Delta mitigates this risk through audit redundancy, formal verification where applicable, and deployment safeguards including time-locked upgrades and immutable critical functions.

• Oracle Manipulation or Feed Disruption Accurate pricing and collateral valuation rely on decentralized oracle networks. Delta addresses this by employing redundant oracle providers, multi-source price feeds, and failover logic to ensure resilience against data lags, manipulation, or service interruptions.

• Infrastructure Dependency Risk Delta’s operations depend on the availability and reliability of underlying blockchain networks and integrated service providers. Operational resilience is enhanced through infrastructure redundancy, rigorous quality assurance protocols, and real-time systems diagnostics.

• Cybersecurity and Attack Surface Exposure As a digital-native platform, Delta is exposed to cybersecurity risks including unauthorized access, front-running, and denial-of-service attacks. These risks are mitigated through strict operational security practices, ongoing penetration testing, third-party audits, and continuous monitoring of threat vectors.

2

Market & Strategy-Specific Risk

• Derivatives Market Exposure The use of perpetual futures and other derivatives introduces risks related to funding rate volatility, forced liquidations, and slippage during adverse market conditions. Delta employs strict position limits, dynamic margin management, and real-time exposure monitoring to mitigate these risks.

• Directional Asset Exposure Under certain market conditions, Delta may maintain net long exposure to digital assets such as ETH or BTC. These positions are strategically limited, hedged where appropriate, and governed by predefined drawdown thresholds and stress-testing protocols.

• Strategy Performance Volatility Yield outcomes may fluctuate due to market dynamics, changing funding environments, or the underperformance of integrated strategies. Delta mitigates this through diversified allocations, adaptive rebalancing, and continuous performance evaluation across all yield sources.

• Interest Rate and Macro Sensitivity Shifts in global interest rates, inflation expectations, and macroeconomic volatility can compress returns or alter relative value between strategies. Delta actively adjusts portfolio exposures in response to rate regimes, funding spreads, and liquidity conditions to maintain optimal capital efficiency.

3

Counterparty & Liquidity Risk

• Counterparty and Custodial Exposure Delta engages with both decentralized protocols and centralized institutions. Despite due diligence and ongoing monitoring, there remains residual risk of counterparty default or operational failure. Delta mitigates this through custody solutions, off-exchange settlement, rigorous onboarding, credit risk frameworks, and diversification across custody and execution partners.

• Liquidity Constraints During Stress Events Market-wide dislocations may impair Delta’s ability to execute trades or rebalance portfolios without incurring slippage. The protocol maintains liquidity reserves, utilizes multi-venue routing, and implements adaptive trading logic to navigate through periods of constrained liquidity.

• Redemption-Induced Imbalances Large-scale or concentrated redemptions, particularly during high volatility, may require rapid position unwinding and introduce NAV deviations. Delta incorporates scenario-based liquidity stress testing and phased redemption protocols to safeguard system stability under such conditions.

4

Currency & Hedging Risk

• Insurance Fund and Reserve Sufficiency To absorb market shocks and protect users from realized losses, Delta maintains a protocol-level Insurance Fund and capital buffer. These reserves are capitalized from protocol earnings and opportunistic gains, rebalanced regularly, and modeled to withstand tail-risk scenarios.

5

Regulatory & Legal Risk

• Evolving Legal and Regulatory Landscape The dynamic regulatory environment surrounding digital assets and decentralized finance may affect protocol operations, product offerings, or user access across jurisdictions. Delta adopts a modular legal architecture, engages specialized counsel in key markets, and maintains the flexibility to adapt operations in response to evolving compliance requirements.

Important Notes for Participants

Delta Money is built with a long-term, risk-aware philosophy. It seeks to align incentives across users, contributors, and liquidity providers through transparent operations and prudent capital management. Nonetheless, it is important for participants to understand that:

• Performance outcomes are variable and not guaranteed.

• Capital preservation is a goal, but not an assurance.

• Individual outcomes may differ based on timing, strategy allocation, and market conditions.

Participants are encouraged to conduct independent due diligence, assess personal financial goals, and consider diversification across platforms and protocols. Delta Money welcomes engagement from informed users and is committed to transparency, education, and continuous improvement in risk practices.