> For the complete documentation index, see [llms.txt](https://propblock-ai.gitbook.io/propblock-ai/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://propblock-ai.gitbook.io/propblock-ai/risk-disclosure.md).

# Risk Disclosure

*PropBlock AI operates at the intersection of blockchain technology, AI, and real-world assets. While we implement robust safeguards, users must acknowledge these inherent risks:*

### ***Protocol Risks***

1. ***Smart Contract Exposure***
   * *PropBlock’s smart contracts are audited but remain experimental. Vulnerabilities could lead to fund loss.*
   * *95% of protocol fees fund a **$50M Insurance Vault** (Chainlink-proofed reserves).*
2. ***AI Model Limitations***
   * *Predictive valuations may fail to account for black swan events (e.g., pandemics, regulatory shocks).*
   * *Models retrain weekly using federated learning across 10,000+ properties.*
3. ***Liquidity Risks***
   * *Secondary markets depend on participant activity. Illiquid assets may trade below intrinsic value.*
   * ***Base Chain’s DEX Liquidity**: Minimum $250k per property pool backed by Uniswap v3.*

### ***Operational Risks***

| Risk                  | Mitigation                                             |
| --------------------- | ------------------------------------------------------ |
| Service interruptions | Geographically distributed node operators              |
| Regulatory changes    | Legal wrappers for 15+ jurisdictions (MiCA, SEC Reg D) |
| Data breaches         | Zero-knowledge KYC (zkPass integration)                |

### ***Market Risks***

* ***Real Estate Volatility**:*\
  *AI rebalancing triggers auto-sell if property values drop >15% in 7 days.*
* ***Crypto Correlation**:*\
  *30-day trailing beta of PROP vs. ETH: 0.62 (as of Q2 2024).*

### ***No Regulatory Safeguards***

*PropBlock AI is not a registered securities platform, broker, or financial advisor. Key implications:*

* ***No Investor Protection**: Funds aren’t FDIC/SIPC insured.*
* ***Unsupervised AI**: Models aren’t audited by financial authorities.*
* ***Jurisdictional Bans**: Restricted in China, Russia, and sanctioned territories.*

### ***User Responsibilities***

*By using PropBlock AI, you agree to:*

1. ***Self-Custody Risks**:*
   * *You alone control wallet keys. PropBlock cannot recover lost credentials.*
2. ***Tax Compliance**:*
   * *Token trades/rentals may trigger capital gains liabilities.*
3. ***Due Diligence**:*
   * *Verify property SPV details via on-chain metadata (IPFS audits).*

### ***Risk Mitigation Tools***

1. ***Portfolio Stress Tester**:*\
   *Simulate 2008-level crashes or 20% rate hikes via AI dashboard.*
2. ***Circuit Breakers**:*

   *Trading halts if AI detects >25% abnormal volume spikes.*
3. ***Transparency Portal**:*\
   *Live audit of property cash flows, insurance reserves, and DAO votes.*