Risks

You can lose some or all of what you put into SukukDAO. This page sets out how. Read it before you buy a seat, a Sukuk or SUKUK.

Default in the underlying trade finance

Tranches fund SukukFi's duPRT vaults, which finance trade receivables. The businesses behind those receivables can pay late, pay part, or not pay at all. Recoveries, when they come, can take a long time and can fall short.

SukukDAO does not choose the receivables. SukukFi runs the vaults and decides what they finance. SukukDAO decides which vaults to deploy into and how much.
The vault operator is a dependency. Deposits into and redemptions from a duPRT vault are requests that SukukFi fulfils. A request it does not fulfil holds that vault until it is cancelled, and the cancel also needs SukukFi to act. Tranches on one vault deploy and redeem one after another. The vaults are upgradeable by their operator. SukukDAO has no control over any of this.
There is no duPRT vault on Robinhood Chain yet. Until there is, no tranche can open.
Losses burn Sukuks hard. A loss is burned from locked Sukuks at backing per token, not at the price you paid. While backing per token is far below that price, a 10% loss in a tranche can burn 90% or more of a Sukuk, and all of it in a worse case. See How losses work.
Recoveries do not give burned SUKUK back. If money lost is later recovered, it refills the reserve for all holders. The SUKUK burned from your Sukuk stays burned.
No profit, no credits. Credits and buybacks come only from realised vault profit. If a tranche earns nothing, its Sukuks receive nothing.
Impairment depends on the payment feed. A missed payment freezes a tranche only once the feed or the guardian marks it. If the last vault shares redeem for less than the principal, backing per token overstates the protocol's position until the miss is marked and the loss recorded.

Smart-contract risk

The contracts are new. They have had internal reviews, three automated multi-agent audit passes and extensive testing, but they have not yet had an external audit. A bug could lose or lock funds. The contracts cannot be upgraded, so a serious bug would need new contracts and a move to them. SukukDAO also depends on code it does not control: Uniswap v4, Safe, OpenZeppelin, USDG and the duPRT vaults.

Known issues and open questions in the current code, which the external audit is asked to assess:

the deposit keeper chooses which vault distribution a profit is recorded under, and the contracts check only that the cash is free;
buybacks can be sandwiched up to their price ceiling unless the keeper sets a tight minimum;
if a tie-break drawer does not reveal, the seat-sale draw falls back to a block hash the chain's sequencer can influence;
a price bounce before the wall's next sweep can resell some of what the wall bought, below backing;
SUKUK held as Uniswap v4 internal balances can move inside the pool manager without passing the token's transfer checks;
when the live price runs more than about 25% above the 4-hour average and the breaker lets it through, a Sukuk bought and exited at once can be a riskless trade;
the 4-hour average takes a rise at once, so an expensive push up can hold it high for hours; after more than 4 hours with no trading, the first trade can drop it by all of the floor's accumulated fall at once;
a Sukuk that a loss burned in part still counts its full principal for credits and its seat's raising fee;
the 5%-a-week release limit is checked per Sukuk, so Sukuks of one tranche whose locks end together can exceed it;
moving a seat's capital to another Agency just before a missed payment moves the loss share off the first Agency;
the SUKUK/TAO pool's price is free to move while it holds no liquidity.

Price and liquidity risk of SUKUK

SUKUK is priced by a market and can fall far, quickly, and stay down.

Your USDG does not come back. A Sukuk is paid in USDG and settled in SUKUK. Principal the vault returns goes to the reserve, not to you.
One official pool. SUKUK trades on one Uniswap v4 pool, which may be thin. Every trade pays a toll: 3% to buy and 5% to sell after the first 120 minutes, and up to 90% in the first minutes.
The wall is not a floor. The bid wall sits below backing per token and has a fixed amount of USDG. Once that is spent, the price can trade lower.
Supply grows. There is no hard cap on SUKUK. Every Sukuk sold creates new SUKUK, and raising fees can create up to 10,000,000 more. Migration releases, Sukuk releases, the genesis Agency's stake release and the seats' SUKUK after 48 months all add SUKUK that can be sold.
Prices you get are not the live price. Sukuks are priced from the 4-hour average, which can differ from what the pool shows. The averages can be pushed by trading, at a cost.
Backing per token is not a claim. No one can redeem SUKUK for the reserve's assets.

Lock-up

A Sukuk is locked for 3 to 36 months, then released over at least 4 weeks. Leaving early costs at least 3.5% and up to 15%, plus a clawback of the discount.
If your tranche misses a payment, exits and claims freeze until the Safe lifts the impairment. There is no time limit on that.
Registered insiders must give notice past the next payment date before they can exit.
Sukuk positions cannot be transferred.
Seat SUKUK is locked for 48 months. Seats can be sold only through a gated path with a notice period, and no seat can be sold while any tranche anywhere is impaired.
Migrated SUKUK outside the genesis Agency vests over 12 months. The genesis Agency's stake is locked until its liability tail ends.

Governance and key risk

Signers are people. Five signers, two of them independent, can approve an action that harms holders. The 7-day queue gives you time to see it, not a way to stop it.
Independence is checked off chain. The contracts trust the conflicts register, and the register is only as good as the verification behind it. Recusal relies on each action's declared subject; the independents are the check on a wrong one.
Keys can be lost or stolen. A compromised signer key weakens the Safe. If too many signers lose their keys, or too few independents can still sign, the Safe cannot act at all.
Queued actions cannot be cancelled. A queued action can only expire.
Freezes can repeat. Any two signers can freeze the routine module and the wall's keeper for 72 hours, and again after a 72-hour wait under a new reason.
Keepers run off chain. If they stop, deployments, buybacks, wall sweeps and fee accruals stop with them. The venue guardian and the tranche guardian are each a single address, and how they are held is set before launch.
One Agency at launch. Until the design for later Agencies is finished, the genesis Agency manages all capital. It is a collective of migrated holders operating through an offshore company whose internal terms sit outside the protocol.
One venue. All tranches deploy into vaults run by one operator.

Regulatory uncertainty

The legal treatment of SUKUK, Sukuks, seats and the protocol is unsettled and differs from country to country. It may be unlawful for you to take part where you live.
A legal question about how SukukDAO's vault positions are treated under financial-services law is with counsel. SukukDAO does not launch, and does not deploy capital into the vaults, until it is answered. The answer could change the design or delay launch.
Rules can change after launch. A change could restrict access, force changes to the protocol, or stop it.
Nothing here is a regulated product. There is no deposit protection and no compensation scheme.
No scholar or board has certified SukukDAO, its Sukuks or SUKUK. The word Sukuk names the instrument.

Chain and stablecoin risk

Robinhood Chain is a young network. It can halt, reorder transactions, or suffer faults that affect the protocol.
USDG is a stablecoin issued by a third party. It can lose its peg, and its issuer can freeze addresses.
Tokens bridged or routed from other chains carry the risks of the bridges and providers that move them.