> For the complete documentation index, see [llms.txt](https://usefelix.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://usefelix.gitbook.io/docs/trading-products/spot-equities/risk-trust-and-transparency.md).

# Risk, Trust, and Transparency

As more investors shift their spot equities trading activity onchain for the sake of convenience and capital velocity, it is important that Felix users understand the differences between offchain equities and the tokenized equities they are trading onchain. It is also important to understand the key risks that are associated with tokenized equities and how Felix and its partners have taken steps to protect investors' funds.

As discussed [here](/docs/trading-products/spot-equities.md), tokenized equities offer economic exposure to US capital markets’ price action and dividend/interest distributions with tradfi level liquidity. This is an unlock that allows investors to allocate more capital onchain and take advantage of asset opportunities that have been previously slowed down by traditional off ramping settlement delays. 

With the provision of onchain tokenized equities’ advantages, there are also key risks. Below you will find a list of the risks commonly associated with tokenized spot equities and their respective mitigations:

### Smart Contract Risk & Custody

Felix spot equities are powered by Ondo Global Markets tokens which are exposed to smart contract risk. Ondo smart contracts are fully and thoroughly audited. These audits can be viewed [here](https://docs.ondo.finance/audits).

When buying spot equities through Felix, your order is routed through a smart contract relayer built and designed by Felix. Any funds that you are sending through here are subject to smart contract risk. Felix’s spot equities relayer is fully and thoroughly audited. This audit can be viewed here:

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When funds are idle in your Felix spot equities account, they are inside of a smart contract and are exposed to smart contract risk. Felix’s spot equities account smart contracts are fully and thoroughly audited. This audit can be viewed in the audit directly above. User funds are self custodial and can be exported from the smart account at any time

### Risk of Undercollateralized Holdings

All tokenized equities are required to have the underlying shares held in an offchain brokerage account by Ondo Global Markets (BVI) Limited. Tokenized RWAs have suffered from a lack of transparency in the past. Transparency reports for all offchain shares held by Ondo Global Markets (BVI) Limited are published each business day and every month. All transparency reports are confirmed by a third party security agent and published directly on the Felix frontend under asset information: “Daily Attestations” & “Monthly Attestations.” For an additional level of protection, these spot equities are overcollateralized by a contractually obligated asset guarantee.

### Bankruptcy and Insolvency Risk

The perceived risk is that the Ondo Foundation group or Ondo Finance Inc. could go bankrupt or suffer from insolvency and have to liquidate the off chain shares held by Ondo Global Markets (BVI) Limited to pay their debt obligations. This risk is mitigated as Ondo Global Markets (BVI) Limited is a special purpose vehicle that is bankruptcy-remote from the Ondo Foundation group and Ondo Finance Inc. 

### Oracle Risk

Traders of Felix spot equities are not exposed to any oracle risk. 

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