Every investment has risks that come with it.
In our platform, this is what we consider more important:
Currency exchange risk:
During the funding process, the project's currency is Ether so the value of the initial contribution might vary.
Once the funding is completed, the project is exchanged to Mexican Pesos (MXN), since it's the currency the farmers can work with at the moment, and that amount will be the one the credit is denominated with, serving as the base for interest calculation.
At this point, the lender is exposed to Mexican Peso volatility, until the repayment when the investment plus interest is returned back in DAI. We are working in a compensation pool to mitigate this risks, but it's not yet active.
Default risk:
There is the possibility that the farmers do not return the money. However, this risk is mitigated by the way EthicHub's loans work. They are solidary loans to groups of 20 families, so the members will cover if another one misses on his obligations.
Since the farmers pay back the loan is payed back with the money obtained by selling their production, the crop yield capacity of the group is audited by the Local Node before being allowed to request a loan, to determine its viability. Furthermore, the Local Node will help training the community to improve production by sustainable methods.
The default rate of our farmers since the 2018 crop is 0%, over more than 30 projects.
Despite of all this, force majeure events can happen. To cover these eventualities, we are developing a compensation pool (not yet active).
Risk associated to private key handling:
EthicHub is a non-custodial blockchain platform. Our users have the freedom to manage their wallet funds and the responsibility to have their 12 backup words and/or private key safely stored.
The freedom, because each user's wallet funds are their property. Neither EthicHub nor a third party could access their funds ever, eliminating the risk of fund loss if EthicHub disappears (platform risk)
The responsibility, because the loss or theft of the private key and/or 12 words can result in irrecuperable loss of funds from the wallet. Do not share them with anyone.
EthicHub es una plataforma blockchain no custodial, es decir que los usuarios tiene la libertad de gestionar los fondos de su wallet y la responsabilidad de tener guardado un recambio de sus 12 palabras de respaldo y/o llave privada.
If you have problems accessing your wallet, please contact support@ethichub.com, we will try to help.
To see the full risk list, please check our terms and conditions.
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