Risk Matrix

Operator and jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles IBC (LEI: 254900IX2F2KCWNSSS64).

Research Partner: Base58 Labs contributes execution research, systems modeling, and risk design.

This page summarises the principal risk categories for BASIS users. Each category is assessed for inherent severity and likelihood before controls, then for residual risk after BASIS mitigations. Residual risk reflects deterministic execution, mathematical exposure constraints, venue limits, and state machine risk controls.

This is a summary disclosure. For full detail, see Risk Disclosure and the individual pages under the Risk section.

Asset and wallet model

• BTC deposits use a BASIS-assigned address that is unique to each account. No Web3 wallet is required for BTC deposits.

• ETH, SOL, and PAXG deposits use a connected Web3 wallet such as MetaMask.

• Native assets are held in the Funding Wallet for deposit and withdrawal activity.

• stTokens are held in the Staking Wallet for staking and reward accrual.

• USDT is an internal accounting and display unit only. It is not a depositable or withdrawable asset.

Swap and unstake model

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Risk Summary Table

Risk Category	Severity	Likelihood	Primary Mitigation	Residual Risk
Smart Contract / On-chain	High	Medium	Independent external audits, conservative governance, CEI pattern, reentrancy guards	Low to Medium
Counterparty (Exchange)	High	Low to Medium	Multi-venue diversification, venue caps, health scoring, BSCB blacklisting	Medium
Funding Rate (Negative)	Medium	Medium	Real-time monitoring, staged position reduction, BSCB pause thresholds	Low
Reference Unit Risk (USDT display basis)	Medium	Low	Reconciliation controls, valuation checks, venue collateral limits	Low to Medium
PAXG / XAU Tracking Risk	Low to Medium	Low	Regulated issuer oversight, reserve attestations, market-integrity monitoring	Low
Liquidity and Lock-up Risk	Medium	Medium	Fixed lock-up design, treasury buffers, native-asset withdrawal management	Medium
Regulatory Risk	High	Low	Seychelles IBC structure, jurisdictional screening, external legal counsel	Medium
Technology Risk (BHLE)	High	Low	N+1 bare-metal failover, deterministic state machine, cryptographic asset enclave	Low
Key Person Risk	Medium	Low	Research continuity, documented procedures, access compartmentalization	Low to Medium
Oracle / Price Feed Risk	Medium	Low	TWAP oracles, multi-source aggregation, circuit breakers	Low
Bridge Risk (BIVB)	High	Low	Independent validator sets, finality thresholds, per-session exposure limits	Medium

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Risk Detail

Smart Contract and On-chain Risk

On-chain components, including bridge and settlement contracts, may contain vulnerabilities not identified during review. BASIS reduces this risk through independent external audits before release, conservative upgrade governance using multisig plus timelock, contract patterns such as checks-effects-interactions, and reentrancy protections. See Smart Contract & On-chain Risk.

Counterparty (Exchange) Risk

BASIS executes across multiple third-party venues to capture structural alpha with execution precision. If a venue experiences insolvency, operational failure, API degradation, or withdrawal restrictions, capital access and yield generation may be affected. Mitigations include venue-level exposure caps, continuous venue health monitoring, automated blacklisting through BSCB, and rapid re-routing where available. See Third-Party Exchange Risk.

Funding Rate Risk

Funding rates can turn negative during adverse market regimes and convert expected yield into cost. BASIS monitors funding continuously and uses staged exposure reduction and pause thresholds when rates move outside approved bands. See Funding Rate Dynamics.

Reference Unit Risk (USDT Display Basis)

Displayed balances use USDT as an internal accounting and display reference for USD-equivalent reporting. USDT cannot be deposited or withdrawn on BASIS. If USDT diverges from USD, displayed valuation and some venue-side settlement references may temporarily differ from spot USD intuition. BASIS mitigates this with reconciliation controls, valuation checks, and limits on venue-specific collateral dependencies. See Risk Disclosure.

PAXG / XAU Tracking Risk

PAXG is active on BASIS and is deposited and withdrawn as a native asset through a connected Web3 wallet. Risk arises if PAXG trades away from underlying gold value, or if issuer, custody, or market structure events affect convertibility or pricing. BASIS relies on regulated issuer disclosures, reserve attestations, and market-integrity monitoring.

Liquidity and Lock-up Risk

Fixed pool positions cannot be unstaked before the selected lock-up ends. There is no early exit option. This design improves capital planning and reduces run-risk from discretionary early withdrawals, but it creates user-side liquidity timing risk if funds are needed before maturity. After lock-up completion, the claimable balance is auto-credited to the Staking Wallet as the same stToken. Users then perform the same-token 1:1 swap back to the native asset before withdrawal.

Regulatory Risk

The regulatory landscape for digital asset yield products continues to evolve. BASIS operates through a Seychelles IBC structure under BASIS DIGITAL INFRASTRUCTURE LTD, LEI 254900IX2F2KCWNSSS64. Changes in securities, derivatives, tax, promotion, custody, or consumer protection rules may affect product availability or servicing in specific jurisdictions. BASIS applies jurisdictional screening and retains external legal counsel to monitor obligations.

Technology Risk (BHLE)

BHLE is BASIS's proprietary routing and execution infrastructure, engineered for sub-50μs decision latency and 100K+ operations per second under normal operating conditions. Risks include software defects, hardware failure, network partition events, and venue connectivity loss. Controls include N+1 bare-metal failover, deterministic execution logic, mathematical exposure bounds, and state machine risk controls. The cryptographic asset enclave is designed so that compromise of an execution node does not by itself permit unilateral movement of user assets.

Key Person Risk

BASIS depends on specialized quantitative, infrastructure, and security expertise. This risk is reduced through documented procedures, segmented operational authority, reproducible research workflows, and continuity planning with its research partner, Base58 Labs.

Oracle / Price Feed Risk

Strategies and accounting processes that depend on market data may be affected by stale, manipulated, or anomalous inputs. BASIS mitigates this with TWAP-based feeds where appropriate, multi-source aggregation, sanity bounds, and circuit breakers that halt actions when feed quality degrades.

Bridge Risk (BIVB)

Cross-system transfers and bridge components may fail due to validator faults, finality assumptions, or software defects. BASIS mitigates this through independent validator sets, finality thresholds, per-session exposure caps, and conservative recovery procedures.

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How to Read This Matrix

• Severity: the potential impact if the risk materialises

• Likelihood: the estimated probability over a 12-month horizon

• Residual Risk: the remaining risk after BASIS controls are applied

⚠️ This matrix is a summary and should be read together with the Risk Disclosure before committing capital.