Risks
Investing in Collective vaults involves risk. You could lose some or all of your investment. Please read this section carefully.
Market Risk
The Pokémon card market can go down.
Card values fluctuate based on:
Collector demand and trends
New set releases affecting older card values
Economic conditions (discretionary spending declines in recessions)
Platform changes (eBay fees, PSA turnaround times, etc.)
A broad market decline will affect vault values regardless of vendor skill.
Vendor Risk
Vendors can make bad trades.
Even experienced vendors make mistakes:
Overpaying for inventory
Holding cards that decline in value
Missing sell windows
Misreading market trends
We mitigate this through:
Careful vendor vetting
Defined risk parameters
Regular reporting and oversight
Diversification across inventory
Liquidity Risk
You may not be able to withdraw immediately.
Cards are illiquid assets. Converting inventory to cash takes time and may require accepting below-market prices for quick sales.
Standard withdrawals require advance notice
Emergency withdrawals incur fees and delays
Extreme scenarios could delay withdrawals further
Operational Risk
Things can go wrong operationally.
Cards can be lost, stolen, or damaged
Grading companies can make errors
Shipping can fail
Fraud exists in the card market
Vendors maintain insurance and follow best practices, but operational losses can occur.
Smart Contract Risk
The technology can have bugs.
Collective's smart contracts handle deposits and vault token issuance. While we follow security best practices:
Contracts may contain undiscovered vulnerabilities
HyperEVM is a newer chain with less battle-testing than Ethereum mainnet
Exploits could result in loss of funds
We will pursue audits and maintain conservative contract design.
Counterparty Risk
You're trusting the vendor with capital.
Deposited funds are used by vendors to purchase cards. You're trusting that:
The vendor will act in good faith
Inventory valuations are accurate
Reported performance is truthful
We mitigate this through transparency, regular reporting, and on-chain tracking where possible.
Regulatory Risk
The legal landscape is uncertain.
Tokenized investment products may face regulatory scrutiny. Changes in law could affect:
Your ability to deposit or withdraw
The platform's ability to operate
Tax treatment of returns
We are not providing legal, tax, or investment advice. Consult professionals for your situation.
Concentration Risk
Early vaults may be concentrated.
Initially, Collective will have limited vendors and inventory. A single bad trade or market event could significantly impact returns. Diversification improves as the platform grows.
Summary
Market decline
Diversified inventory, experienced vendors
Bad trades
Risk parameters, oversight, track records
Illiquidity
Liquidity buffer, epoch system
Operational
Insurance, best practices
Smart contracts
Audits, simple design
Counterparty
Transparency, on-chain tracking
Regulatory
Legal monitoring, compliance efforts
Only invest what you can afford to lose.
→ FAQ → How Returns Work
Last updated