Risks
8.1 Technical Risks
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Smart contract vulnerability | Medium | Critical | Dual audits, formal verification, bug bounty ($500K), timelock on upgrades |
| Oracle data manipulation | Low | High | 3-of-5 multi-sig, TLSNotary verification, weather data cross-reference, SGC slashing |
| SGM-1 hardware failure | Medium | Medium | Tamper-resistant design, 10-year warranty, insurance fund, remote attestation |
| SGM-1 hacking | Low | High | Secure element, hardware-bound keys, tamper detection, key wipe on breach |
| L2 downtime | Low | Medium | Settlement falls back to Ethereum L1. Historical L2 uptime >99.9%. |
8.2 Market Risks
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Energy price volatility | High | Medium | Diversified revenue (not just ET trading), storage arbitrage, data/analytics |
| Low initial adoption | Medium | High | Focus on high-pain markets (Texas, Australia), installer partnerships, referral program |
| Utility resistance | Medium | High | Start with municipal utilities and behind-the-meter (unregulated). Build consumer demand. |
| Competition from big tech | Low | High | Speed to market, utility partnerships, open-source protocol, patent portfolio |
8.3 Regulatory Risks
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| ET classified as security | Low | Critical | Legal review, commodity classification argument, REC precedent, no-action letters |
| Peer-to-peer trading blocked | Medium | High | Behind-the-meter first, municipal partnerships, consumer advocacy |
| Cross-border trading restricted | Medium | Medium | I-REC framework, bilateral agreements, phased international expansion |
8.4 Economic Risks
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| SGC price collapse | Medium | Medium | Value tied to utility demand, not speculation. No revenue sharing promises. |
| Insurance fund depletion | Low | High | 3% of all protocol fees allocated to insurance. Reinsurance partnerships at scale. |
| Hardware cost overrun | Medium | Medium | $45 target based on mass production. Margin buffer at $60 unit cost. |
8.5 What SunGrid Does Not Promise
- Guaranteed returns or yield.
- Token price appreciation.
- Regulatory approval in all jurisdictions.
- Replacement of existing grid infrastructure.
- Zero risk of loss.
SunGrid is infrastructure. Like all infrastructure, it carries risk. The protocol is designed to minimize and distribute that risk, not eliminate it.