Frequently asked questions

Clear answers about Paravel, vault participation, fees, withdrawals, and the risks of PayFi lending.

Risk5 questions

What are the main ways I could lose money?

Borrower default. You bear the credit risk of the underlying borrowers. A default may mean partial or total loss.
Off-chain custody failure. Your deposit does not stay on the blockchain. It may be converted, held in accounts with banks and payment institutions, and transmitted to borrowers. If one of those institutions fails, freezes funds, or is subject to regulatory action, the Vault is exposed.
Payment rail failure. PayFi depends on payment networks functioning. Interruption, delay, misdirection or blocking of funds in transit is a live risk specific to this strategy.
Stablecoin risk. A material depeg or a suspension of redemption by a stablecoin issuer affects the Vault directly.
Valuation error. The carrying value of loans is an estimate. Realised values may be materially lower.
Illiquidity. Loans cannot generally be sold. If many people redeem at once, the Vault may not be able to meet requests.
Smart contract and key risk. On-chain assets are exposed to contract vulnerabilities and to compromise or loss of administrative keys.
Regulatory change.Lending in a borrower's jurisdiction may require licensing. Regulatory change may make a loan unenforceable or stop a Vault operating.

Section 13 of the Vault Participation Terms sets these out in full, along with others.

Is my deposit insured or protected?

No. Vault Interests are not deposits, are not guaranteed by any bank, and are not covered by any deposit guarantee, compensation or investor protection scheme anywhere.

Is Paravel regulated?

No. The Issuer is an unregulated entity and no Vault is authorised, registered or supervised by any financial services regulator in any jurisdiction.

This matters practically. You do not have the protections that apply to a regulated fund or a regulated lender — no regulatory oversight of how assets are valued, no mandatory audit, no custody requirements, and no access to an ombudsman or a compensation scheme. If something goes wrong, your remedies are contractual.

We think it is better to state this plainly than to leave you to discover it.

Is there a guaranteed return?

No. Nobody guarantees the repayment of any loan, the payment of interest, the preservation of your capital, or any rate of return. Past performance of any Vault, borrower or strategy tells you nothing reliable about the future.

Is the return fixed or variable?

Variable. Your return is whatever the underlying loans produce after losses, provisions and expenses — reflected in the Vault's net asset value. It is not a rate we set.