# Part I ## Information on risks #### I.1 Offer-Related Risks The offer of SWEAT involves risks linked to its availability and market perception. * There is no guarantee that SWEAT will maintain value after admission to trading. * Purchasers may not find a liquid secondary market to sell SWEAT, resulting in potential losses. * SWEAT is not backed by assets, deposits, or guarantees, meaning holders bear the full risk of value fluctuation. * The offer is subject to evolving regulatory oversight, which may result in restrictions on distribution, marketing, or trading. #### I.2 Issuer-Related Risks Risks relating to the Sweat Foundation Ltd. as issuer include: * Financial risks: As a foundation, it is dependent on ecosystem growth and treasury management to sustain operations. Unexpected reductions in funding or revenue may affect its ability to support SWEAT. * Business activity risks: Sweat Economy operates in a highly competitive consumer-tech and blockchain sector where rapid changes in adoption, user behaviour, or industry trends could undermine sustainability. * Legal and regulatory risks: As laws governing crypto-assets evolve, especially in the EU and globally, SWEAT could face new compliance burdens or restrictions. * Internal control risks: Operational challenges such as staffing, process management, or inadequate oversight could affect business continuity. * Governance risks: Misalignment between stakeholders or ineffective governance could lead to poor strategic decisions that negatively impact SWEAT holders. #### I.3 Crypto-Assets-Related Risks Risks linked specifically to SWEAT as a token include: * Market volatility: The price of SWEAT may fluctuate significantly in response to supply-demand dynamics. * Liquidity risks: While SWEAT is listed on multiple exchanges, liquidity may vary, impacting holders’ ability to sell at fair value. * Loss of access: Mismanagement of private keys, wallets, or access credentials may result in the permanent loss of SWEAT. * Adoption risk: The value and utility of SWEAT depend on continued ecosystem adoption. Lower engagement or fewer partners could reduce demand. #### I.4 Project Implementation-Related Risks Risks relating to Sweat Economy’s project execution include: * Technical delays: Implementation of planned features (e.g., new DeFi integrations or expansion into new markets) may be delayed or encounter setbacks. * Strategic risks: Failure to establish key partnerships, secure regulatory clarity, or expand user engagement could negatively impact SWEAT’s long-term vision. * Resource constraints: Human and financial resources may not be sufficient to deliver on the project roadmap, reducing the scope or pace of development. #### I.5 Technology-Related Risks Technology risks associated with SWEAT include: * Blockchain dependency: SWEAT relies on NEAR Protocol and Ethereum, exposing it to network outages, congestion, or protocol-level vulnerabilities. * Cybersecurity threats: Hacking, phishing, or smart contract exploits could result in theft, data loss, or disruption. * Software vulnerabilities: Errors in code or unforeseen bugs in smart contracts may create systemic weaknesses. * Third-party reliance: Validators, exchanges, wallet providers, and service partners could suffer failures, indirectly impacting SWEAT’s usability. #### I.6 Mitigation Measures The Sweat Foundation Ltd. and Sweat Economy have implemented or are implementing the following measures: * Security audits of smart contracts and infrastructure to reduce vulnerability risks. * Use of energy-efficient blockchains (NEAR, Ethereum post-Merge) to lower environmental impact. * Ecosystem diversification through DeFi, partnerships, and in-app utility to support adoption. * Treasury management and reserves to sustain operations through volatile markets. * Compliance monitoring to adapt to evolving EU and global regulatory requirements. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://whitepaper.swe.at/mica-compliant-white-paper/part-i.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.