Risk Disclosure

As a financial service provider liqd is governed by a set of policies and procedures which are designed to ensure safeguarding of customer assets on our platform. In order to generate the positive revenue to pay the Earn interest it is necessary for us to allocate those assets to strategies that have been proven successful in both reliable income generation and risk management, from counterparties that have passed our assessment criteria. In selecting such counterparties we use rigourous controls and testing to ensure their suitability and ability to deal with potential risks that they may face as this could in turn affect the return of funds to our users.

Whilst we don't provide full details of all the counterparties that we employ on our platform, which is also subject to change and adjustment on a regular basis, we are open to providing details on a confidential basis to interested parties, as long as they are also a licensed entity or equivalent. 

As with any business transaction it is always necessary to monitor your counterparties credit worthiness and manage risk to reduce exposure or to optimise the ability to deal with extreme market volatility. Liqd adheres to a practice of only allocating assets to strategies that are market neutral - meaning that for example if a strategy involved a currency exchange then a financial derivative product such as a future or option would be employed to ensure that whether the currency / asset moved up or down in value, the return to liqd would be unaffected. In the same way if we are for example allocating funds to collateralised assets lending (e.g. property bridge lending) then we would monitor the credit worthiness of the borrower and also the suitability of the collateral and ensure that the maximum loan to value did not exceed a prudent percentage, to account for any volatility in the price of the asset during extreme market conditions.

That's said there is inherent risk with any financial transaction and our further strategy to deal with both counterparty and market risk is to ensure that we allocate funds across a range of uncorrelated assets and counterparties in order to minimise the effects of any specific difficulties that one of them may face. 

Furthermore liqd does retain a percentage of our profits which are separately allocated towards a reserve guarantee fund that is designed to pay out in case any losses were sustained by a specific strategy, over time this fund increases in value along with the profits of the platform and so we are able to gain in strength and stability and as our balance sheet grows.

This risk disclosure is intended to offer a general insight into our methodology of managing risk and as always with any financial product there can never be zero risk involved. All our users should understand these concepts prior to depositing funds with LIQD.