Risks & Mitigants
TIX Credit uses revenue-based financing, which has a fundamentally different risk profile than traditional asset-backed lending. This page outlines the key risks and how the protocol mitigates them.
Risk Philosophy
Traditional lending has binary outcomes:
Pay → Loan completes successfully
Default → Collateral repossession, legal proceedings, partial recovery
TIX Credit has a continuous recovery model:
Strong sales → Advance recouped quickly, contract completes
Moderate sales → Advance recouped over time, contract extends
Slow sales → Contract runs to term, fees still collected
Venue closure → Only scenario with potential loss
Key Risks & Mitigants
1. Volume Risk
Risk: Venue sells fewer tickets than projected, extending the recoup period.
Contract Extension
Agreement continues until volume threshold OR time limit
Continuous Fee Collection
Every ticket generates revenue, regardless of pace
Time Limit Cap
48-month maximum limits exposure duration
Volume Underwriting
Conservative projections based on historical data
Impact Analysis:
Even "worst case" scenarios (short of closure) generate positive returns.
2. Venue Closure Risk
Risk: Venue closes permanently, ending fee collection before advance is recouped.
Reserve Holdback
5% of proceeds held for 6 months
Advance Acceleration
Full balance due upon closure
Legal Remedy
Contract enforcement against organizer
FiLo First-Loss
Junior capital absorbs losses first
Portfolio Diversification
No single venue >X% of total advances
Closure Scenarios:
Temporary closure
Fees pause, contract extends
Ownership change
Agreement survives, new operator bound
Permanent closure
Acceleration clause, legal recovery
Bankruptcy
Claim in proceedings, limited recovery
3. Exclusivity Breach Risk
Risk: Venue uses competitor ticketing platform, violating exclusivity agreement.
Contractual Clarity
100% exclusivity requirement explicit
Monitoring
Curator verifies compliance
Cure Period
Opportunity to remedy breach
Advance Acceleration
Full balance due on uncured breach
Legal Enforcement
Contract damages available
Breach Response Timeline:
4. Market Risk
Risk: Overall decline in live entertainment demand affects all venues.
Geographic Diversification
Portfolio across multiple markets
Venue Type Mix
Theaters, clubs, arenas, festivals
Genre Diversity
Multiple music/entertainment genres
Economic Resilience
Entertainment often resilient in downturns
Historical Context:
Live entertainment recovered strongly post-COVID
Ticket prices have increased faster than inflation
Demand for live experiences remains robust
5. Operator Risk
Risk: Poor management leads to venue underperformance.
Due Diligence
Management team vetting
Track Record Review
Historical operating performance
Key Person Provisions
Contract terms tied to management
Ongoing Monitoring
Curator oversight of operations
6. Concentration Risk
Risk: Too much exposure to single venue, operator, or market.
Single Venue Limit
No venue >10% of total advances
Single Operator Limit
No operator >15% of total advances
Market Limit
No market >25% of total advances
Governance Oversight
Protocol approval for large deals
Risk Waterfall
Unlike asset-backed lending with repossession waterfalls, TIX Credit has a fee revenue waterfall:
Loss Absorption (When Closure Occurs)
If a venue closes before full recoup:
Comparison: Revenue-Based vs Asset-Backed
Default trigger
Missed payment
N/A (no payments)
Slow performance
Default risk
Contract extends
Recovery mechanism
Repossession & auction
Extended fee collection
Recovery timeline
6-18 months
Continuous (up to 48 mo)
Recovery rate
40-70% typical
80-100%+ typical
Collateral risk
Depreciation
N/A (no collateral)
Enforcement cost
High (legal)
Low (automatic)
Depositor Expectations
sUSDtix depositors should understand:
What to Expect
✅ Yield from ticket fees — Protocol collects fees on every ticket sold ✅ Continuous revenue — Fees flow regardless of individual venue performance ✅ Extension protection — Slow venues extend rather than default ✅ Portfolio diversification — Risk spread across multiple venues
What Could Happen
⚠️ Lower yield periods — If venues underperform, fees are lower ⚠️ Extended timelines — Individual deals may take longer to complete ⚠️ Redemption queues — Liquidity tied to fee collection timing
Worst Case
❌ Venue closures — Only scenario with potential principal loss ❌ Market collapse — Systemic decline in live entertainment ❌ Mass defaults — Multiple operators fail simultaneously
Risk Metrics Dashboard
Key Indicators
Weighted Avg Volume %
>80% of projection
60-80%
<60%
Advances Outstanding
<70% of fees received
70-90%
>90%
Venue Closures (TTM)
0
1
>1
Exclusivity Breaches
0
Cured
Uncured
Portfolio Concentration
Within limits
Near limits
Over limits
Monitoring Frequency
Volume tracking
Daily
Fee reconciliation
Bi-weekly
Exclusivity audits
Weekly
Portfolio review
Monthly
Stress testing
Quarterly
Stress Scenarios
Scenario 1: Recession
Assumption: 30% decline in ticket volume across all venues
Fee revenue
-30%
Recoup timeline
Extended
Yield to depositors
Reduced to 7-10% APR
Principal risk
Low (fees still collecting)
Scenario 2: Major Venue Closure
Assumption: Largest venue (10% of portfolio) closes
Principal at risk
10% of advances
Recovery expected
40-60% via legal
Net loss
4-6% of portfolio
Absorbed by
FiLo + Insurance + Socialization
Scenario 3: Pandemic-Style Shutdown
Assumption: 6-month complete shutdown of live events
Fee revenue
$0 for 6 months
Contract status
All contracts pause
Principal risk
Low (contracts extend)
Recovery post-reopening
Contracts resume, fees restart
Next: App Guide →
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