Risks relevant for all cryptocurrencies
Data Losses Risk: affected: All
Some cryptocurrencies make use of blockchain technology. This implies that every bitcoin transaction ever done is recorded on a single blockchain, preserving its full history. Unlike other competitors, AVAX deletes old transaction history. However, this can be detrimental by deleting information that might be needed to trace possible irregularities or damage to currency buyers.
Technology Risk: affected: All
The asset and its service providers may be at risk for operational and information security risks as a result of a cyberattack or cybersecurity breach, including one that affects the blockchain network. The asset may suffer a variety of negative effects from a cybersecurity breach, whether deliberate or unintentional, including a loss of proprietary information, the theft or corruption of data stored online or digitally, denial-of-service attacks on websites or network resources, and the unauthorized disclosure of confidential information.
Risk of losses and volatility: affected: All
The volatility of an asset is a measure of how much the price of a given asset has increased or decreased over time. Generally speaking, the riskier an item can be, the larger returns or greater losses it may have the ability to provide over shorter time periods. The trading prices of many digital assets have experienced extreme volatility in recent periods and may well continue to do so.
Value Risk: affected: All
The use cases for Ethereum outside of payment are still limited in scale, even though they are expected to grow. We don't know how Ethereum will evolve. Ethereum's value could be significantly lost if these additional use cases don't materialize.
Sustainability Risk: affected: All
In September 2022, in an attempt to make its network more sustainable ETH merged with and adopted the proof-of-stake layer. Consequently, this greatly reduces the number of computers needed to maintain the blockchain and can make Ethereum mining less productive.
Centralization Risk: affected: All
After ETH moved to proof-of-stake and transaction validators became Ethereum's stakers, there is a risk that it could easily lead to the centralization of power if a small number of delegates or influential validators gain control over the authority to approve and validate transactions.
Exchange rate risk affected: All
Exchange rate risk is the possibility that the exchange rate between currencies could affect a company's profitability and operations. Therefore, if the currency of the Product differs from the currency you invest in, your final return depends on the exchange rate between your investment currency and the currency of the Product.