Security and fraud protection

Potential threats and system vulnerabilities

Potential Risks and Vulnerabilities	Mitigation Strategies
Market Volatility: Fluctuations in the value of energy NFTs can impact investor returns.	Diversify the investment portfolio to mitigate overreliance on a single asset. Implement risk management strategies such as hedging or derivatives to offset potential losses. Our allocation strategy involves the following distribution: 80% in energy contracts managed by QENERGY, a reputable energy company. 20% allocated to staking within the blockchain protocol known as FRQTAL PROTOCOL. This strategic approach yields a twofold benefit: firstly, it works to stabilize market volatility; transforming traditional NFTs into FNFTs (Financial Non-Fungible Tokens). Secondly, it establishes a price floor to mitigate the potential for price fluctuations and ensure greater stability.
Regulatory Uncertainty: Evolving or unclear regulations surrounding NFTs and renewable energy could affect the project's legal status.	Conduct thorough legal research and engage legal experts to ensure compliance with existing and emerging regulations. Proactively adapt the project to align with regulatory changes. For this reason, we opted for the term "NFTs" instead of conventional "tokens" or "coins" within our business model. We have chosen a network that will implement Know Your Customer (KYC) protocols for transactions exceeding specific amounts. Furthermore, our selection of a provider aligns with stringent compliance requirements dictated by regulations. We veered away from entirely decentralized providers that lack accountability to any governing authority.
Smart Contract Vulnerabilities: Bugs or vulnerabilities in smart contracts could lead to exploitation or financial losses.	Conduct extensive code audits and security assessments of smart contracts by reputable blockchain security firms. Implement multi-signature wallets and upgradeable contract mechanisms to minimize risks. We have entrusted the task of security to the FRQTAL protocol, which incorporates pivotal security elements. These include a non-custodial wallet, a robust subnet on the Avalanche blockchain, their proficient compensation system, the resilient security of their contract architecture, and a unique concept referred to as the "liquid price floor."
Data Privacy Concerns: Handling personal and sensitive data could lead to breaches, jeopardizing user privacy.	Implement robust data encryption, strict access controls, and comply with data protection laws. Store sensitive data off-chain whenever possible and conduct regular security audits. -- We employ Kubric, Node, and decentralized databases, all interconnected through encrypted connections, with data transmission facilitated via mobile devices. -- In terms of capital management, nothing resides within a conventional database. All generated or stored value is housed within a liquidity pool on Pangolin.
Environmental Impact: Energy-intensive blockchain networks may contradict the project's green energy goals.	Explore energy-efficient consensus mechanisms like Proof of Stake (PoS) or Layer 2 scaling solutions to minimize the project's carbon footprint. Collaborate with renewable energy sources for sustainable blockchain operations. -- We employ the FRQTAL PROTOCOL, which harnesses staking and Proof of Concept (POC) for its operations. -- As an environmentally-conscious company, we have also opted to leverage their FOUNDATION programs for the reforestation initiatives we intend to drive. -- Furthermore, the entire data cluster associated with the collection operates on clean energy sources, a detailed breakdown of which can be found on the page www.frqtal.org/es/1percent. Additional Environmental Impact Points: Carbon Offset Initiatives: We actively engage in carbon offset initiatives to counterbalance our operational carbon footprint, ensuring a net-zero or even positive environmental impact. Renewable Energy Partnerships: We forge strategic partnerships with renewable energy providers to ensure that our energy consumption aligns with our commitment to sustainability, reducing reliance on fossil fuels.
Lack of Adoption: Insufficient interest and adoption could hinder the project's success.	Develop a comprehensive marketing and outreach strategy to attract buyers and investors. Collaborate with industry influencers and establish partnerships to enhance visibility and credibility. -- We have crafted a robust network strategy that allows us to privately unveil the collection before its public release. -- We establish alliances with prominent brands ahead of their public launch. -- Collaborations with strategic partners like WeAreTheClub, Troop, Grupo Expert, LaMeraMeta, Otherverse Industries, and more have been established to facilitate the placement and publication of our collection.
Technological Obsolescence: Rapid changes in blockchain technology could render the project outdated.	Stay informed about technological advancements and plan for adaptability. Design the project architecture to accommodate future upgrades and integrate emerging technologies. -- Thus, our preference lies in a technology that is inherently scalable. -- The utilization of a virtual Ethereum machine empowers effortless migration to alternate networks, should such a need arise. -- We have chosen a development partner with a distinct focus on this area, further enhancing the confidence in our decision.
Counterparty Risk: Dependence on third-party services for NFT creation, trading platforms, or energy sources could expose the project to risks beyond its control.	Conduct thorough due diligence on partners and service providers. Establish clear contractual agreements and contingency plans to mitigate potential disruptions. -- At all times, the company is in control of the NFTs, the FNFTs are created within the company's wallets, -- The wallets are backed by cold hardware.

Please note that this table provides a general overview of potential risks and mitigation strategies. The actual risks and appropriate mitigation measures may vary based on the specific details and circumstances of the crypto NFT energy project.