# Risks

### Risks

> ⚠️ Investing in HYBOND involves risks. Please read the full Risk Assessment document before investing.

The following risk categories are applicable to HYBOND:

#### Market Risk

The underlying BNY Global Short-Dated High Yield Bond Fund is subject to market fluctuations. The NAV of HYBOND will vary in line with the performance of the underlying fund.

#### Liquidity Risk

Redemptions are subject to a **T+4 settlement period** and a **10% NAV gating limit per epoch**. In stressed market conditions, the ability to redeem may be delayed.

#### Smart Contract Risk

HYBOND operates on smart contracts deployed on Ethereum. These contracts may contain bugs or vulnerabilities. All contracts are subject to third-party security audits prior to mainnet deployment.

#### Counterparty Risk

HYBOND relies on BNY for fund custody and asset management, and on Coinbase/BitGo for crypto custody. Failure or insolvency of any service provider could impact investor assets.

#### Regulatory Risk

The regulatory landscape for tokenized real-world assets is evolving. Changes in applicable laws or regulations may affect HYBOND's operation or availability in certain jurisdictions.

#### Oracle Risk

The exchange rate is updated by an off-chain keeper bot and safeguarded by Price Guards. A failure or manipulation of the price feed could result in incorrect minting or redemption amounts.

#### Operational Risk

Manual processes — including KYC whitelisting, NAV updates, and fund wire transfers — introduce operational dependencies that may delay or disrupt normal vault operations.