> ## Documentation Index
> Fetch the complete documentation index at: https://docs.cargotrading.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Checklist for Cargo Vaults

> The risks of holding Cargo vault shares, from asset price and basis to custody, legal, liquidity, oracle and smart-contract risk, and what absorbs each one. With Genesis Vault (cvCOCOA) specifics.

Read this before you bid. The risks below apply to every Cargo vault; the examples are from the Genesis Vault (cvCOCOA, West African Grade 1 cocoa). The binding version is the Risk Statement for each vault in the data room, which every investor signs.

> [accordion] Asset Price
>
> NAV follows the reference price of the underlying asset (for cvCOCOA, ICE London Cocoa) and can fall.
>
> > [!NOTE]
> >
> > The discount you buy at is your cushion. Holders and market makers can hedge on the asset's reference market. In the Genesis Vault, 10,000 shares move like one 10 t ICE London Cocoa lot.

> [accordion] Basis and Oracle
>
> The reference price can diverge from the hedge market, the reference can fail to publish, and the vault's realised sale prices can come in below NAV.
>
> > [!NOTE]
> >
> > Every vault has a differential check with a hedge-market fallback and a pause, an outage fallback, a cost reset when realised sales run below NAV, and a lower-of oracle for lending. Genesis Vault values: $250/t basis move from the 30-day median; outage fallback after two business days with no reference price; cost reset if realised sales average $150/t below NAV over 30 days.

> [accordion] Custody, Quality and Fraud
>
> Goods could be missing, short-weight, off-grade or damaged.
>
> > [!NOTE]
> >
> > Independent collateral manager with sole release authority; independent verification of every lot (Vallis in the Genesis Vault); weekly reports hashed on-chain; suspension and recount above 0.5% discrepancy; all-risks insurance; 10% subordinated first loss.

> [accordion] Counterparty and Sponsor
>
> The originator, buyer, exporter or dealer, or the sponsor could fail.
>
> > [!NOTE]
> >
> > The Vault SPV owns the goods, not the sponsor; one pledge for all holders; originators warrant weight, grade and title and top up shortfalls; physical delivery above a set size (10 t in the Genesis Vault).

> [accordion] Liquidity
>
> You may not be able to exit when you want, at the price you want.
>
> > [!NOTE]
> >
> > Redemption at NAV − 0.10% at each batch (in the Genesis Vault, first at Batch 4, paid within 12 days); Liquidity Bridge at NAV − 1.0% up to its capacity; RFQ with panel market makers, with no guarantee of a bid; redemptions may be pro rata if the queue exceeds bridge capacity.

> [accordion] Legal and Regulatory
>
> Security could be harder to enforce than expected, and rules where the SPV is incorporated or the goods are stored could change or be applied differently.
>
> > [!NOTE]
> >
> > Title to the SPV plus a registered pledge where the goods are stored; legal opinions on title, pledge and enforcement before a vault's first mint; private offers to eligible investors only; the issuer's regulator has been asked to classify cvCOCOA, and the venue will move to a licensed route if required.

> [accordion] Smart Contract and Keys
>
> Code can have bugs; keys can be lost; chains can halt.
>
> > [!NOTE]
> >
> > Independent audit before mainnet (not yet completed); Safe administration with timelock and independent co-signer; pause guardian; non-custodial atomic settlement; paper records as fallback.

> [accordion] Concentration
>
> Each vault is one asset. The Genesis Vault, the only vault at launch, is one commodity under one collateral manager.
>
> > [!NOTE]
> >
> > Ring-fenced lots; insurance; later vaults spread exposure across assets, such as coffee and sugar, each only after the eight tests.

> [!WARNING]
>
> Figures in our materials are illustrations, not forecasts, and are never annualised. You can lose some or all of your capital.


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