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Risk Documentation

This document explains material risks associated with using CollaFi as a lender, borrower, or listed NFT project. Read it before participating.

Important: Lending and borrowing can result in the loss of HBAR or NFT collateral. Use CollaFi only with assets you can afford to lose entirely.

Platform architecture and security​

CollaFi uses Hedera's native token and account capabilities for HBAR transfers, NFT transfers, allowances, associations, and collateral custody. Avoiding custom smart-contract logic removes one category of technical risk, but it does not make the platform risk-free.

CollaFi's platform logic, databases, infrastructure, and custody keys remain operational dependencies. Security practices include code review, testnet validation, loan-lifecycle testing, monitoring, credential controls, and independent review where available.

Risks for lenders​

NFT price volatility​

NFT prices can change sharply. If a borrower defaults, the claimed NFT may be worth less than the original principal or may be difficult to sell.

No platform LTV cap​

CollaFi does not enforce a maximum loan-to-value ratio. Lenders choose their offer amounts and bear the risk of that decision.

Capital lockup​

After an offer is accepted, the principal remains committed for the active loan term. It cannot be recalled while the loan is active.

Borrower default​

A default gives the lender a right to claim the NFT collateral, not a guaranteed HBAR recovery. Realized value depends on future market conditions and liquidity.

Claim fees​

Claiming a defaulted NFT incurs a fixed fee determined by the original principal. This fee reduces the economics of the recovery.

Risks for borrowers​

Loss of collateral​

If the borrower does not repay the principal and interest before the seven-day deadline, the lender becomes eligible to claim the NFT. There is no grace period, and a completed claim is irreversible.

Borrowing costs​

Borrowers pay an acceptance fee and collection-specific interest. Review the complete amount before accepting an offer and confirm you can fund repayment.

Market conditions​

If the NFT's market price falls during the loan, repaying the original amount may no longer appear economically attractive. That does not alter the repayment obligation or extend the deadline.

Risks for listed projects​

Holder behavior​

Project teams should clearly explain that holders can lose collateral through default. Listing a collection does not remove the need for responsible borrowing.

Defaulted NFTs returning to market​

Lenders may sell NFTs received after defaults. A concentration of defaulted assets returning to the market could affect the collection's floor price.

Reputational risk​

Borrowing activity, defaults, and user outcomes can affect how a community views a project. Teams should coordinate with CollaFi on education and communication.

Custody and platform failure​

While a loan is active, the NFT collateral is held in a Hedera account controlled by CollaFi. Repaid HBAR can also remain under platform control until claimed by the lender. Both parties therefore rely on CollaFi's operational security and custody controls.

If CollaFi ceases operation, loses access to custody keys, or suffers a key compromise, escrowed NFTs or unclaimed HBAR could become unrecoverable. There is no insurance, guarantee fund, or independent custodian guaranteeing those assets.

Native Hedera services reduce smart-contract exposure, but custody and application logic remain controlled by CollaFi systems rather than autonomous on-chain contracts.

Price data risk​

Displayed floor prices and marketplace offers are indicative third-party data. They can be delayed, unavailable, distorted by low liquidity, or affected by manipulative trading. They are not guarantees of the price at which an NFT can be sold.

Availability and third-party services​

CollaFi may be unavailable because of maintenance, infrastructure failures, network disruption, or failures at external services. Dependencies can include:

  • Hedera network services and Mirror Nodes.
  • Wallet providers and WalletConnect infrastructure.
  • NFT marketplaces and market-data APIs.
  • NFT metadata, IPFS gateways, and media CDNs.
  • Email, Discord, support, analytics, and workflow providers.

Do not rely on uninterrupted access for time-critical actions.

Notification risk​

Email, Discord, and in-platform notifications can be delayed or fail. They are conveniences only. The Portfolio deadline is authoritative, and users remain responsible for monitoring and acting on their loans.

User error and phishing​

Blockchain transactions are irreversible. Incorrect transfers, missed deadlines, excessive allowances, duplicate actions, or reliance on an unconfirmed transaction can cause loss.

Only use the official site at collafi.com. Never disclose a private key or seed phrase to CollaFi, support agents, or any website.

Regulatory risk​

Rules governing digital assets, NFTs, and lending can change. Users are responsible for complying with the laws that apply in their jurisdiction. CollaFi is not a regulated financial institution and does not provide legal, tax, or financial advice.

Rewards program risk​

Points have no monetary value and are not tokens, securities, or financial instruments. Rewards depend on available inventory. CollaFi may modify, suspend, or discontinue the program and may revoke points connected to manipulation, exploitation, or abuse.

User responsibilities​

Wallet security​

  • Keep private keys and seed phrases secret.
  • Verify the domain before connecting or signing.
  • Review every transaction and allowance request.
  • Keep wallet software and devices updated.
  • Clear unnecessary allowances for cancelled or abandoned transactions.
  • Ensure your account is associated with an NFT token before it needs to receive that NFT.

Due diligence​

  • Research collections before lending or borrowing.
  • Review floor-price history, liquidity, and trading activity.
  • Read all amounts, fees, and terms before approval.
  • Monitor active loans directly through Portfolio.
  • Do not depend solely on third-party notifications.

Anti-abuse measures​

CollaFi may monitor suspicious activity and take actions permitted by its Terms, including account restrictions, point adjustments, transaction blocking, content removal, or other controls intended to protect users and platform integrity.

Reporting an issue​

Report suspected vulnerabilities or suspicious behavior through the CollaFi Discord or by emailing info@w3b.studio.

Acknowledgment​

By using CollaFi, you acknowledge these risks and make your own lending and borrowing decisions. CollaFi does not guarantee returns, profits, yields, asset values, uninterrupted availability, or recovery after a loss.