Yield Layer Risk Disclosure

At CIAN, the creation of each yield layer is predicated on a rigorous due diligence framework. We conduct comprehensive analysis and forensic investigation of all potential partners and underlying assets to evaluate the sustainability and safety of the product. Our specific risk assessment criteria are detailed below:

1. Protocol Selection and Counterparty Risk Our strategy prioritizes integration with top-tier protocols. These entities generally possess superior liquidity depth and robust security architectures, making them the only suitable environments for significant capital flows.

• Strategic Integration: We assess the depth of partnership and technical integration. For instance, CIAN maintains an exclusive partnership with AAVE and Lido, designed specifically to ensure the security of capital movement and protocol interoperability.

2. Underlying Asset Quality and Traceability We perform a granular analysis of all underlying assets to identify inherent risks. This includes verifying the traceability of assets on-chain and determining the existence of exclusive partnership agreements that may enhance asset security.

3. Lending Market Dynamics and Interest Rate Volatility We analyze the supply and demand mechanics of the lending pools to mitigate interest rate risks:

• Supplier Concentration Risk: We evaluate the distribution of asset suppliers. High concentration poses a risk; if a dominant supplier executes a large withdrawal, the pool’s utilization rate may surge. This triggers a sharp increase in borrowing rates, which can temporarily cause the yield layer’s APY to turn negative.

• Market Fluctuation: Historically, such events are classified as normal market fluctuations, with pools typically rebalancing and stabilizing within a one-week timeframe.

4. Collateral Risks and Solvency

• Collateral Risk: We investigate whether collateral assets are available for borrowing by other market participants. If collateral can be borrowed, there is a risk of bad debt accumulation stemming from low-quality assets within the protocol.

• Liquidation Risk (Actual LTV): We continuously monitor the Actual Loan-to-Value (LTV) ratios to assess and mitigate the risk of liquidation events under various market conditions.

5. Liquidity and Deleveraging We assess the ability to exit positions under both normal and extreme market conditions:

• Immediate Exit Liquidity: We verify the feasibility of immediate deleveraging via Decentralized Exchanges (DEX). We account for swap costs, factoring in a standard slippage tolerance of 1% to 2% to recover deposit assets.

• Exclusive Exit Channel: We prioritize assets and partners that offer exclusive, direct exit channels to ensure liquidity is accessible even during periods of market stress.

6. Transparency and Audit To ensure operational integrity, we conduct a thorough review of asset transparency:

• Audit Verification: We require comprehensive, up-to-date audit reports.

• On-Chain Forensics: We verify that assets do not point to unknown, unverified, or high-risk contract addresses.

• Proof of Reserves: We evaluate the frequency and validity of asset proof reports and reserve updates.