OKX Middle East LST Risk Disclosure Statement

LST Risk Disclosure Statement

BETH and OKSOL — Liquid Staking Tokens

Issuer / Licensed Distributor:  OKX Middle East Fintech FZE (“we”, “us”, “OKX ME”)

Version:  1.0

We publish this Risk Disclosure Statement pursuant to Part III of the VARA Virtual Asset Issuance Rulebook. It describes the material risks of holding BETH (representing staked Ether) and OKSOL (representing staked Solana), which are Liquid Staking Tokens (“LSTs”). You should read it together with our BETH and OKSOL Whitepaper, but it is a separate document. We have written it to be clear and non-technical. It does not list every risk. You should not acquire or hold an LST unless you understand these risks and can bear a total loss.

No VARA endorsement. We issue BETH and OKSOL as a Category 2 VA Issuance. VARA has not approved or endorsed them, and VARA gives no warranty as to us, the LSTs, or their suitability or regulatory status in any jurisdiction.

Nature of the token – on-platform only

Each LST is an on-platform record (an accounting entry) maintained by us, representing an underlying asset staked through our staking service: OKSOL (OKX Liquid Staked SOL) represents staked SOL, and BETH (OKX Staked ETH) represents staked ETH. An LST is not itself an on-chain token (it is not an SPL token or an ERC-20 token) and has no public-ledger contract or mint address; the underlying SOL and ETH are what we stake on the Solana and Ethereum networks respectively. Each LST exists only as a record within our platform and is made available only on our platform. You cannot withdraw it to an external or self-custodied wallet, and you can only hold, transfer (between platform users), trade, use as collateral, or redeem it on our platform. If you lose access to your account, or if our platform services are interrupted, your ability to use or redeem the LST may be affected.

Slashing and de-pegging risk – you may lose value

We issue each LST on a one-to-one (1:1) basis against the underlying asset committed by clients for staking, and we maintain the number of LSTs in issue equal to the number of underlying assets committed for staking. The underlying staked assets (ETH and SOL) are nonetheless subject to slashing, where a portion of the staked amount is forfeited due to validator faults or penalties. If the underlying staked assets are slashed, the amount of underlying asset recoverable in respect of each LST may be reduced, which may reduce the value you can realise on redemption, and the market value of an LST may diverge from the value of the underlying asset (de-peg). We do not maintain an insurance fund or any other mechanism to make up a slashing shortfall, and we do not guarantee against any loss arising from slashing.

The way slashing operates differs between the two networks:

• BETH (Ethereum): Ethereum enforces slashing at the protocol level. A validator that violates the consensus rules (for example, by double-signing) has a portion of its staked ETH forfeited, and penalties can be materially larger where many validators are affected at the same time. Validators that are offline also incur penalties. Redemption of BETH is subject to Ethereum's validator exit queue, the duration of which varies with the size of the network exit queue and may extend materially during periods of high redemption volume.

• OKSOL (Solana): Solana's protocol-level slashing has historically been limited and has not generally enforced automatic forfeiture of staked SOL in the same way. However, validator misbehaviour, delinquency or extended downtime can reduce rewards and, in certain protocol conditions, the underlying staked SOL, and future protocol changes may introduce or increase slashing penalties. Redemption of OKSOL is subject to Solana's stake deactivation mechanics, which typically resolve within approximately two to five (2 to 5) days.

No guaranteed return

Staking rewards are a pass-through of rewards generated by the underlying networks. They are variable, are not fixed or guaranteed, may fall, and may be zero. The LST does not promise any yield, interest or return.

Redemption, unbonding and liquidity risk

Redemption requires the underlying asset to be unstaked from the relevant protocol, which is subject to network unbonding periods and protocol conditions and may take time (these periods differ by network, as described under “Slashing and de-pegging risk” above). During periods of market stress, high redemption demand, or network disruption, redemptions may be delayed.

Market and volatility risk

The value of an LST is tied to the price of the underlying asset (ETH or SOL). Cryptoasset prices are highly volatile and can fall sharply. You may receive back significantly less than the value at which you acquired the LST.

Counterparty and insolvency risk – no protection scheme

Your rights are contractual claims against us, and redemption depends on our continued operation and solvency. LSTs are not covered by any investor protection or deposit guarantee scheme. If we become insolvent, you may rank as an unsecured creditor and may not recover the full value, or any value, of your LSTs.

Validator and protocol risk

We perform staking through validators that we operate ourselves; we do not use third-party validators or third-party staking providers for the LSTs. These validators and the related staking infrastructure are nonetheless exposed to operational failures, downtime, validator misbehaviour, software bugs, network or protocol vulnerabilities, and key-management failures, any of which can reduce or eliminate the value of the underlying staked assets and the rewards distributable to holders.

Collateral and leverage risk

If you use an LST as collateral on our platform, we may apply a discount (haircut), so an LST is generally worth less as collateral than the underlying asset. If the value of your collateral falls, your positions may be subject to margin calls or liquidation, potentially at a loss, and you may lose more than the value of the LST.

Operational, custody and cyber risk

Holding and redeeming LSTs depends on our systems, controls and custody arrangements for the underlying assets. These are exposed to operational errors, system outages, cyber-attacks, fraud and security breaches, which may affect the availability or value of your LSTs.

Regulatory risk

The regulatory treatment of staking and of liquid staking tokens is evolving and differs by jurisdiction. Future regulatory or legal developments, including reclassification of the LSTs, new restrictions, or supervisory action, could adversely affect the LSTs, restrict their availability, or affect your ability to hold or redeem them.

Tax risk

Acquiring, holding, transferring, earning rewards on, or redeeming LSTs may have tax consequences. We do not provide tax advice. You are responsible for understanding and meeting your own tax obligations.

Total loss

For the reasons above, it is possible to lose some or all of the value of your LSTs. Only commit assets you can afford to lose.

Maintenance of this Statement

We will keep this Risk Disclosure Statement accurate and complete and will publish updates in the event of changes to the Virtual Assets. We will date each update, and all previous versions will remain easily accessible in the same format and location. We will retain records of all versions for at least eight (8) years from the date each Virtual Asset ceases to be in circulation. We make this Statement available in the same easily accessible location as, but separate from, our Whitepaper at https://www.okx.com/en-ae/help/okx-middle-east-beth-whitepaper and  https://www.okx.com/en-ae/help/okx-middle-east-oksol-whitepaper