7. Risk analysis
This section outlines the risks and mitigation methodologies that ComVerse needs to be aware of and adopt as part of the greater ComVerse strategy to strengthen both ComVerse and Combased ecosystem on all fronts.
The macro-economic environment is a big risk to any Web3 projects on all chains, as prolonged downturns will mean that sentiment will largely be negative, and liquidity will be hugely restricted compared to bull phases of the market.
ComVerse needs to exhibit consistency in:
- Building out the ecosystem regardless of the bull or bear phases of the market
- Launch self-sustaining products and strategies that are self-sufficient and non-reliant on treasury capital
- Stablecoin distribution and allocation to ensure CDO Wallet and Combased Treasury are both hedged against a market downturn
- Being community-first, not revenue-first, on regular business endeavors as long as core costs can be covered, the focus should be on the community, especially during bearish market phases
An obvious risk to highlight is that ComVerse is now completely reliant on the success and adoption of MultiversX. This is a risk that should be recognized and should not be taken lightly. Believing in MultiversX and spreading risk are separate matters altogether.
To mitigate this ongoing risk, ComVerse needs to:
- Consider expanding greater ComVerse collections on other chains
- Shift a percentage of the CDO Wallet funds into other chains and yielding methods independent of MultiversX
- Build up a community following on a secondary chain of choice (for example ADA, Ethereum)
There is increased risk in the impending enforcement of all sorts of regulatory compliance in multiple jurisdictions. The laws and governments are currently playing catch-up, however, they will eventually be up to date on all the latest technology developments.
The NFT collections as well as CDO Wallet functions are areas at the most risk of regulatory scrutiny in the future, especially as Combased grows in presence and popularity.
Some risk mitigation strategies to consider are as follows:
- Combased needs to be fully compliant regarding entity setup, tax structures, and audits on all fronts
- The relationship between Combased and ComVerse needs to be properly defined, in a traditional business sense. Is ComVerse a standalone entity under the umbrella of Combased Group?
- The CDO Wallet needs to have clearly defined and legally binding terms and conditions as there are liability loopholes at current for Combased which are not currently quantified when managing funds on behalf of other “investors”