# Risks & Disclaimers

Investing in Wagon Network involves certain risks. While we prioritize transparency and on-chain accountability, it is important for every user to understand the potential risks involved before participating in any lending pool or investment opportunity.

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## 1. **Default Risk from Borrowers (MSME)**

* **Risk:** Borrowers may fail to pay rental obligations or cease operations entirely.
* **Mitigation:**
  * Strict eligibility screening and credit scoring.
  * Legal right to repossess leased assets.
  * Collateral recovery and asset liquidation mechanisms.

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## 2. **Asset Operational Risk**

* **Risk:** Logistics assets (e.g., trucks) may be unproductive or suffer damage.
* **Mitigation:**
  * All financed assets are comprehensively insured.
  * Routine maintenance and operational inspections.

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## 3. **Asset Depreciation Risk**

* **Risk:** The value of physical assets may decline due to wear or market conditions.
* **Mitigation:**
  * Each project is time-limited to preserve asset value at the end.
  * Insurance coverage protects against physical damage or loss.
  * A portion of rental income is set aside regularly to ensure principal repayment at maturity, reducing dependency on final asset value.

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## 4. **Smart Contract or Technical Risk**

* **Risk:** Bugs or vulnerabilities in smart contracts may affect fund distribution or security.
* **Mitigation:**
  * All contracts undergo third-party audit and are open-sourced.
  * Emergency stop and upgrade features are built into the protocol.

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## 5. **Liquidity Risk in Secondary Market**

* **Risk:** Tokens representing fractional ownership of assets may not be easily sold on the secondary market.
* **Mitigation:**
  * Wagon provides an internal marketplace.

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## 6. **Regulatory Disclaimer**

* Wagon Network operates in alignment with current regulatory frameworks.
* Users are responsible for understanding applicable tax and legal obligations in their jurisdiction.

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## 🛡 Disclaimer

This platform does not provide investment advice. Participation in asset-backed DeFi pools involves risks, and past performance does not guarantee future returns. Users are encouraged to do their own research and assess their risk tolerance before participating.