> For the complete documentation index, see [llms.txt](https://docs.ethosis.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ethosis.org/risk/issuer.md).

# Counterparty risk in the token issuer

Holding a Stock Token is not the same as holding the share. The token is a tokenised debt security from Robinhood Assets (Jersey) Ltd which tracks a share sitting in US custody. Every Ethosis loan carries that difference inside it, and the protocol handles it as a risk in its own right.

## The components of the exposure

| Component               | What it involves                                                                                                                                                      |
| ----------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Credit                  | Should the issuer become insolvent, token holders would rank as creditors with a claim on the custodied shares. Recovery might be delayed, partial, or both.          |
| Freeze and restriction  | Under its terms the issuer may suspend, freeze or restrict tokens in certain circumstances. Exercised against escrowed collateral, that would make it untransferable. |
| Redemption              | Primary redemption happens at the issuer and requires KYC. The protocol never depends on it; it depends on secondary-market auction prices.                           |
| Regulatory intervention | A regulator could force the issuer to alter its terms, restrict jurisdictions or stop issuing.                                                                        |

## Pricing and containing it

### Built into the tier LTVs

A Tier A ceiling of 55% sits well below the 80%-plus a prime broker might hypothetically lend against the share itself, and most of that gap is issuer and liquidity risk. The tiers are calibrated so that a substantial issuer haircut is absorbed before any slice suffers impairment.

### Inspecting the bytecode first

That the published documentation shows no on-chain freeze function on Stock Tokens is not sufficient on its own. Before a market opens, the deployed bytecode of the listed token is examined for pause, freeze, blacklist and forced-transfer roles, and the finding is published on the risk page beside that market. If a role of that kind is present, the tier LTV and the exposure cap reflect it.

### Reserves

Wherever a Chainlink Proof-of-Reserve feed or a comparable attestation covers the issuer's custodied shares, `PriceGate` reads it and the risk page shows it beside every Stock Token market. A market with no such feed says so explicitly.

### Limits on concentration

Per-token exposure caps bound the principal outstanding against any single token. Since every Stock Token comes from the same issuer, the risk page also reports the protocol's total exposure to Robinhood Assets (Jersey) Ltd as one figure, and a cap on that protocol-wide issuer exposure is a candidate parameter on the roadmap.

### Separation between markets

Because markets share nothing, an issuer event affecting one Stock Token, or all of them, cannot reach a market collateralised by a bridged treasury token.

## For lenders

A loan against Stock Tokens is a loan against a claim on a regulated broker's custody arrangement, not against the share. A lender who wants the stock without the intermediation can set `selfLiquidate` and receive collateral in kind, but the issuer claim comes with it. The tier LTVs and caps express the protocol's view of how much that claim should be discounted; any lender may apply a stricter view through `maxLtvBps`.


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