2. Acknowledgements of the Client
2.1. The Client acknowledges that Staking Rewards are only earned when a total amount of Crypto Assets is delegated to the selected node which is sufficient to keep this node active (hereinafter “Minimum Required Stake”). The Validator cannot guarantee that such a Minimum Required Stake is delegated to the nodes operated by Validator at all times. The Client also acknowledges that the amount of Staking Rewards to be earned is not guaranteed, but depends on various factors. For example, even if the Minimum Required Stake is delegated to a Validator Node, the amount of Staking Rewards to be distributed by the network depends on the total amount of Crypto Assets of a network being staked.
2.2. By participating in Staking, the Client can achieve relatively high returns in the form of the Staking Rewards compared to other investment products. It is explicitly pointed out that this is only possible due to the risks associated with staking. The risks associated with staking also essentially depend on the specifications of the respective network as well as the performance of the selected node. In general, however, the following risks are to be expected:
During staking, a (partial) loss of the Crypto Assets used or a loss of reward can occur. This is the case if the Validator Node violates the applicable rules or technical requirements of the respective blockchain network and is "punished" by the blockchain network for this. A "punishment" by the blockchain network is currently conceivable for the following:
- "Liveness error": A liveness error occurs, among other things, if the Validator does not ensure the necessary availability of the Validator Node it operates and misses the validation of individual or multiple blocks on the blockchain.
- "Security error": A security error occurs, among other things, when the same blocks are signed twice or more often. Such security errors are also referred to as "double- baking", "double signing", or "double-endorsing".
- During the staking, the Client usually cannot initiate any transfers of the Crypto Assets that are staked, so that he e.g. cannot react to changes in the value (exchange value, value in money), by selling the staked Crypto Assets. Instead, the Client must normally first unstake the delegated Crypto Assets - subject to deadlines and other conditions - before it is possible to transfer the Crypto Assets again.
2.3. The Client acknowledges that Validator only supports non-custodial staking and the Parties hereby agree that the Validator shall in no event become, act as, or be deemed as the custodian of the Crypto Assets staked by the Client. In case that one of the Supported Networks changes to custodial staking, Validator is entitled to terminate the support of that Supported Network immediately.
2.4. The Validator is not an asset manager or investment adviser to the Client. The Validator does not make any recommendations to the Client in relation to financial services, investments, taxation, legal matters or accounting. In particular, the technical support of a specific network is not to be understood as a recommendation to buy Crypto Assets of this network.
2.5. As staking is a relatively new mechanism, it is currently not foreseeable whether or in which cases Validators or other third parties interposed by the Validator will require a license from the German Federal Financial Supervisory Authority (BaFin) or the corresponding authorities in their home countries. Currently, validators do not have such a permit as they see themselves as information technology (IT) providers. Therefore, the Validator is currently not holding a license for validation services.
2.6. The Supported Networks, like other decentralized, open-source blockchains networks, may be subject to "forks." Forks occur when some or all persons running the software clients for a particular blockchain network adopt a new client or a new version of an existing client that: (a) changes the protocol rules in backwards-compatible or backwards-incompatible manner that affects which transactions can be added into later blocks, how later blocks are added to the blockchain, or other matters relating to the future operation of the network; or (b) reorganizes or changes past blocks to alter the history of the blockchain. Some forks are "contentious" and thus may result in two or more persistent alternative versions of the network or blockchain, either of which may be viewed as or claimed to be the legitimate or genuine continuation of the original. The Validator may not be able to anticipate, control or influence the occurrence or outcome of forks of the network, and does not assume any risk, liability or obligation in connection therewith. Without limiting the generality of the foregoing, the Validator does not assume any responsibility to notify the Client of pending, threatened or actual forks. The Validator will respond to any forks as the Validator determines in its sole and absolute discretion and shall not have any obligation or liability to the Client if such response benefits the Validator to the detriment of the Client. Without limiting the generality of the foregoing, the Validator's possible and permissible responses to a fork include, among others: (i) continuing to serve as a Validator on both networks; (ii) serving as a Validator only on one network; (iii) ceasing to be a Validator on both networks; or (iv) switching from serving as Validator on one such network to serving as a Validator on the other, or vice versa, based on various factors. In the event of a fork of the network, it is possible (but not guaranteed) that the same number of Crypto Assets that were delegated to Validator on the original network will by default be delegated to Validator on the forked network. In the event that the Validator does not choose to support both networks, Client's validation rights and voting rights may go unexercised on the network the Validator does not support, and the Client may temporarily or permanently lose Crypto Assets, staking rewards or transaction fees on the unsupported network. The Client assumes full responsibility to independently remain apprised of and informed about possible forks, and to manage Client's own interests in connection therewith, including by potentially retracting a delegation to the address of Validator's node on a fork that Validator does not support.
2.7. The Client further acknowledges that:
- it has knowledge of blockchain technology, staking, validation, accounts, keys, and details of the services provided by the Validator;
- it has adequately informed himself/herself about the Staking and the risks associated with it, has decided solely based on this information whether to participate in the staking and acknowledges that it is its responsibility to keep himself/herself informed about possible changes in the risks associated with the staking;
- it is the sole responsibility of the Client to monitor staked Crypto Assets and, if necessary, to actively initiate measures to unstake its Crypto Assets in a timely manner and in
- the technologies and activities involved in the blockchain are novel, experimental and speculative and that there is significant uncertainty regarding the application of law thereto;
- it has conducted its own thorough investigation of the Validation Service provided under this Agreement, the blockchain network for which the Validator provides its services, and any other matters that are relevant to offer and receipt of services under this Agreement;
- nothing in the cooperation between Validator and Client creates any corporate body, joint venture, partnership, or other form of joint enterprise, employment, franchise, or fiduciary relationship between the Parties. Neither Party has any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any obligation, contract, agreement, or undertaking with any third party.
