MiCAR White Paper

The Interfold Foundation is a business company limited by shares dedicated to advancing the Interfold protocol, a distributed network for confidential coordination that enables independent parties to produce shared, verifiable outcomes from private inputs without pooling data or delegating execution authority to a single operator. The company's core business activities include developing the open-source protocol for Encrypted Execution Environments, organising the admission to trading of the FOLD token, and overseeing the staged rollout of the decentralized ciphernode network to establish a distributed execution network that makes confidential coordination reliable at scale across markets, governance systems, institutions, and multi-agent environments. The Interfold Foundation operates globally.

As The Interfold Foundation was established on 2026-06-15, three-year historical financial data is not available.

The Interfold Foundation is a newly established entity in the early stages of development. The company has not yet generated substantial revenue or incurred significant expenses.

A brief summary of The Interfold Foundation's financial performance at the time of writing is as follows:

Funding and Capitalization:

• The company's initial share capital is USD 50,000, that was provided through a 250,000 USDT grant from the Aragon Foundation.

• The entity is sufficiently self-funded with fiat and ETH.

• The FOLD token has a fully diluted value as of August 19, 2026 of approximately USD 26,400,000.

Interfold Ltd. is a British Virgin Islands business company limited by shares, wholly owned by The Interfold Foundation, dedicated to acting as the issuing entity for the FOLD token within the Interfold ecosystem. The company's core business activities include issuing and vending the token, entering into distribution and commercial agreements, and facilitating the flow of consideration between the ecosystem and its participants to support the development of the protocol and the growth of its decentralised network. Interfold Ltd. operates globally.

The Interfold Foundation is a business company limited by shares dedicated to advancing the Interfold protocol, a distributed network for confidential coordination that enables independent parties to produce shared, verifiable outcomes from private inputs without pooling data or delegating execution authority to a single operator. The company's core business activities include developing the open-source protocol for Encrypted Execution Environments, organising the admission to trading of the FOLD token, and overseeing the staged rollout of the decentralized ciphernode network to establish a distributed execution network that makes confidential coordination reliable at scale across markets, governance systems, institutions, and multi-agent environments. The Interfold Foundation operates globally.

The Interfold is a distributed network for confidential coordination focusing on enabling independent parties to produce shared, verifiable outcomes from private inputs without requiring data pooling, exposure, or reliance on trusted hardware.

The Interfold provides infrastructure that lets multiple parties compute together on shared data without anyone, including The Interfold's own network, ever seeing that data in the clear. Each computation runs in a temporary, purpose-built secure environment created specifically for that task and discarded afterward (an Encrypted Execution Environment, or E3). The cryptographic keys needed to reveal a result are split across a decentralized network of independent operators (ciphernodes), so no single operator can access the underlying data alone. This allows organizations, networks, and communities to collaborate and compute jointly on sensitive information, even when they don't fully trust one another or are in direct competition, using encryption that allows computation directly on encrypted data (Fully Homomorphic Encryption), mathematical proofs that verify a computation without revealing its inputs (Zero-Knowledge Proofs), and key-splitting across multiple independent parties so no single one holds full access (Distributed Threshold Cryptography).

The Interfold token (FOLD) is the native utility and governance token of the The Interfold ecosystem. It is designed to support ciphernode bonding for network operators, facilitate economic incentives for completing threshold execution duties, and empower holders to participate in decentralized governance over network parameters and treasury administration within this interconnected ecosystem.

Given the technical nature of The Interfold project, a glossary has been included in this section of the MiCAR whitepaper to clarify the key terms and concepts used throughout the MiCAR whitepaper.

Technical and Protocol Terms

• Ciphernodes: The distributed operator layer of the Interfold network. These independent operators participate in distributed key generation and threshold decryption for computations without possessing unilateral control over the process.

• Confidential Coordination: A system design where private inputs are used to produce shared, verifiable outcomes without pooling data or giving any single operator control over the execution environment.

• DKG (Distributed Key Generation): A protocol process where ciphernodes collectively produce public keys used to encrypt inputs. This ensures no single party holds the full decryption key.

• DTC (Distributed Threshold Cryptography): Technology used to decentralize key control for protocol operations.

• E3 (Encrypted Execution Environment): An ephemeral, bounded execution surface created for a specific computation (such as an auction or a vote). It is designed to close immediately once the process is complete.

• FHE (Fully Homomorphic Encryption): A cryptographic primitive that allows for computation to be performed directly on encrypted data.

• Network Alpha: The first coordinated mainnet phase of the Interfold network, which includes early ciphernodes and initial production validation.

• Non-deterministic Computation: Outcomes that are not fixed; if a computation is found to be non-deterministic, it can trigger the burning of a portion of the associated bond.

• Sortition: The randomized selection process used by the protocol to choose a specific committee of ciphernodes from the broader network to handle a single computation.

• Threshold Decryption: A cryptographic mechanism requiring a specific minimum number of committee members (ciphernodes) to provide "decryption shares" before a result can be released, preventing any single party from exposing private inputs.

• ZKPs (Zero-Knowledge Proofs): Cryptographic methods used to verify the validity of inputs and computation without revealing the underlying data.

Financial and Tokenomic Terms

• Bonding: The requirement for ciphernode operators to commit FOLD tokens and a stablecoin (USDC) as economic collateral to ensure correct participation in the network.

• CCA (Continuous Clearing Auction): The specific auction mechanism used on Uniswap for the public distribution of FOLD tokens to determine a fair clearing price.

• FDV (Fully Diluted Value): The total market value of the token supply if all tokens were in circulation at the current market price. As of August 19, 2026, this was approximately USD 26,400,000.

• FOLD: The native utility and governance token of the Interfold protocol, used for network participation and bonding.

• Slashing: The permanent removal (burning) of staked tokens from circulation, triggered by protocol violations such as unauthorized intermediate decryption. A portion of the slashed tokens are permanently removed (burned) and the remaining portion of the slashed tokens is given to the slasher, of whom must call a function in order to slash the offending node.

• TGE (Token Generation Event): The milestone marking the official creation of the FOLD token and the start of its transferability.

The FOLD token has several key functionalities within the Interfold ecosystem. The platform offers a suite of goods and services designed to coordinate Encrypted Execution Environments, allowing independent parties to produce shared, verifiable outcomes from private inputs without data custody, exposure, or reliance on trusted hardware.

Key utilities of the FOLD token include:

• Network Governance: FOLD holders can participate in the Interfold DAO to influence critical decisions regarding network parameters, protocol upgrades, and treasury administration.

• Ciphernode Bonding: The token is used as an economic commitment by operators, who must bond the token alongside a stablecoin to guarantee correct network participation and ensure accountability in the threshold decryption process.

• Encrypted Execution Enforcement: Users can operate ciphernodes to actively participate in distributed key generation, threshold decryption, and the execution of confidential coordination processes.

• Protocol Incentives: The token grants access to permissionless network operation roles by fulfilling the protocol's technical and bonding requirements, and allows users to earn token incentives and a share of protocol fees for successfully completing cryptographic duties within an Encrypted Execution Environment committee.

The Interfold has secured financial resources (approximately 523.94 ETH) through a Continuous Clearing Auction on Uniswap that completed the first public distribution of FOLD tokens, alongside prior pre-seed, private seed, and bridge rounds.

These resources are allocated to key areas, including:

• Product Development & Art: 43%

• Marketing & Community Growth: 35%

• Consultancy and Legal/Compliance: 22%

The project is supported by a development group, initially established by Gnosis Guild, with specialists in fully homomorphic encryption, zero-knowledge proofs, and distributed threshold cryptography. Operational support is bolstered by dedicated personnel focused on protocol development, operating ciphernodes for threshold enforcement, and maintaining the Encrypted Execution Environments infrastructure.

This is not applicable because there will be no raising of funds. This is not an offer of the FOLD token but rather an admission of the FOLD token to trading, as it is already in circulation.

The admission to trading of The Interfold. (FOLD) is intended to:

• Increase Accessibility and Liquidity: To make the FOLD token more accessible to European users and improve its liquidity on secondary markets. This can result in more efficient price discovery and reliable trade execution.

• Enhance Transparency and Compliance: This MiCA-compliant disclosure is filed to enhance transparency, regulatory clarity, and investor confidence. It signals the project's readiness to align with the high disclosure standards of Regulation (EU) 2023/1114.

• Support Ecosystem Growth: By increasing access, The Interfold Foundation aims to encourage wider participation and contribution to the Interfold ecosystem.

This initiative is an admission to trading and not a fundraising event or public offer.

The project is targeted at all types of investors. No restrictions are being applied other than those required by relevant laws, regulations, or the internal policies of the trading platforms.

Access to the FOLD token may be restricted by the individual trading platforms where it is made available. These restrictions may include, but are not limited to, geo-fencing for users in OFAC-sanctioned jurisdictions or other individuals prohibited under the platform's terms and conditions and applicable laws.

Purchases of FOLD on trading platforms may be made using supported crypto-assets Ether (ETH) or fiat currencies (EUR, USD), as per the available trading pairs on the platform. The information on the specific payment methods and providers of payment services is available at https://www.coinbase.com, https://www.okx.com, https://www.kraken.com, https://www.gate.com/en-eu, and https://www.bitvavo.com and their use is subject to the applicable terms and conditions of the specific service provider.

If applicable, any valid reimbursements shall be made to the account or wallet originally used to participate in the offer.

The FOLD acquired as a result of trades shall be transferred through means designated by the trading platform to the compatible wallet or account as designated by the selected Trading Platforms.

Purchasers must have an account on a trading platform where FOLD is listed and abide by that platform's terms. Technically, holders must have a digital wallet compatible with the ERC-20 on the Ethereum or Arbitrum blockchain. This can be a self-custodial wallet or an account managed by a third party (like an exchange). Basic requirements include internet access and a compatible device (computer or mobile).

FOLD is available on several centralized and decentralized trading platforms. Investors can access these platforms by creating an account on their respective websites (e.g., https://www.coinbase.com, https://www.okx.com, https://www.kraken.com, https://www.gate.com/en-eu, and https://www.bitvavo.com) and complying with the platform's requirements, including KYC/AML verification.

Access to the trading platforms is typically free, but users will incur costs related to trading and transactions. These may include transaction fees (maker/taker fees), withdrawal fees, and network fees. These costs are set by the individual exchanges and are not controlled by The Interfold Foundation. Users are advised to review the fee schedule on the respective platform's website at https://www.coinbase.com, https://www.okx.com, https://www.kraken.com, https://www.gate.com/en-eu, and https://www.bitvavo.com.

The Interfold Foundation, directly or through smart-contract-controlled allocations, 76338059 tokens, representing up to 61.19% of the total token supply, as disclosed in field G.5. This holding comprises:

Foundation Treasury — 502,000,976 tokens (41.83%);
Team and Advisory — 108,000,000 tokens (9.00%);
Unsold CCA allocation — 76,320,000 tokens (6.36% );
Airdrop — 48,000,000 tokens (4.00%).

The Foundation acknowledges that a holding of this size could, in principle, give rise to a conflict of interest in relation to the admission to trading, including as regards potential influence over the market for the tokens. The Foundation considers this potential conflict to be mitigated by the following factors, which reflect standard market practice:

(a) the Foundation Treasury, Airdrop allocation are held and administered exclusively by smart contract, with the Foundation exercising no discretionary control over these tokens beyond the parameters encoded in that smart contract;

(b) the only tokens retained by the Foundation on a discretionary basis are the Team and Advisory allocation, representing 9.00% of the total supply, which is subject to the vesting and lock-up arrangements described in G.11.

Save as described above, and to the best knowledge of The Foundation, no conflicts of interest have been identified in relation to the admission to trading.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be governed by and construed in accordance with the laws of the Cayman Islands.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be exclusively subject to the jurisdiction of the courts in the Cayman Islands.

The Interfold. is classified as an "Other Crypto-Asset" under Regulation (EU) 2023/1114, as it is not an Asset-Referenced Token (ART) or E-Money Token (EMT). It is a fungible token based on the ERC-20 standard.

The FOLD token's primary functionalities within the Interfold ecosystem include:

• Operator Bonding: Ciphernode operators must bond FOLD tokens, along with a stablecoin, to become eligible for network duties. This bonding mechanism creates an economic commitment to correct network participation and is subject to withdrawal periods and penalties for provable misbehavior.
• E3 Request Economics: The token provides the economic layer for Encrypted Execution Environment (E3) computation requests. It helps coordinate the decentralized network of operators and protocol processes that support confidential coordination and threshold decryption.
• Operator Rewards: Active ciphernode operators may receive token incentives in exchange for successfully completing protocol-defined duties. These rewards compensate operators for participating in threshold coordination, supporting E3 lifecycle execution, and helping enforce network rules.
• Governance: Token holders can participate in the long-term governance of the protocol through the Interfold DAO. This enables stakeholders to make decisions regarding network parameters, protocol upgrades, operator requirements, and treasury administration.

The functionalities described in F.2 are scheduled to be activated following the token generation event and the subsequent rollout of Network Alpha.

FOLD is a fungible utility crypto-asset classified as an "Other Crypto-Asset" under MiCA. It operates as an ERC-20 token on both the Ethereum blockchain and Arbitrum, an Ethereum Layer-2 network. Ethereum is a Layer-1 blockchain that uses a Proof-of-Stake consensus mechanism for its own security and settlement. Arbitrum uses optimistic rollup technology, batching transactions off-chain and posting them to Ethereum for settlement, with fraud proofs securing the validity of state transitions and Ethereum's Layer-1 providing underlying security. The Interfold protocol, which coordinates FOLD's utility, layers a separate stakeholder-driven mechanism on top of these base chains: ciphernode committees are selected for each computation through randomized sortition, providing strong economic and cryptographic guarantees around data privacy, data integrity, and correct execution without relying on trusted hardware or centralized operators. FOLD does not represent ownership, profit rights, or legal claims, and functions solely to support the protocol's technical and economic operations.

The issuer operates in the field of distributed network infrastructure for confidential coordination and provides the following services as part of its everyday business activity: the development and maintenance of open-source protocols for Encrypted Execution Environments (E3s) and providing technical implementation resources for privacy-preserving applications such as sealed-bid auctions and secret ballots. These activities enable the secure processing of sensitive information for collaborative data analysis in fields like medical research and finance, ensuring that data handling meets international standards such as the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA).

Purchasers or holders of FOLD do not acquire any contractual rights, equity interests, profit-sharing rights, dividends, or other legal claims against The Interfold Foundation or any affiliated entity by virtue of holding the token.

The FOLD token is a decentralized digital asset designed for functional use within the The Interfold ecosystem. Any "rights" are limited to the token's protocol-level utility, such as:

• Ciphernode Bonding: The ability to bond tokens as economic collateral to become eligible for active network duties and participate in threshold cryptography operations.
• Protocol Incentives: The ability to earn rewards by successfully completing protocol-defined duties as active members of an Encrypted Execution Environment committee.
• Governance: The ability to participate in the Interfold DAO to vote on network parameters, protocol upgrades, operator requirements, and treasury administration.

Holding FOLD does not represent ownership in any legal entity and does not confer any right to financial returns.

There are no formal contractual rights to "exercise." Any functionality associated with FOLD is exercised technically by interacting with the Interfold protocol's smart contracts.

For example:

• Governance: Rights are exercised by participating in the Interfold DAO to make decisions on network parameters, protocol upgrades, and treasury administration, utilizing a secret-ballot application powered by the network.

• Utility: Rights are exercised by bonding tokens as economic collateral to operate a ciphernode and perform threshold enforcement duties, or by utilizing the tokens to pay the fees required for requesting Encrypted Execution Environments (E3s).

These actions are carried out on-chain and are validated by the decentralized network, not by the Interfold Foundation. Procedures are defined in the project's public documentation (https://docs.theinterfold.com).

The Interfold Foundation cannot unilaterally modify the token's functionalities. As The Interfold is a decentralized protocol, any changes to the token's utility or the network's rules are subject to the project's established governance process.

Modifications occur through proposals submitted to the Interfold DAO concerning network parameters, operator requirements, protocol upgrades, and treasury decisions,, which must be voted on by FOLD token holders using a coercion-resistant, secret-ballot application powered by the Interfold network.

The Interfold Foundation does not intend to conduct any future public offerings of the FOLD token. The token is already in circulation and available on secondary markets.

FOLD functions as a utility token within the Interfold ecosystem, providing access to its core goods and services. These include:

• Ciphernode Bonding: Operators must bond FOLD tokens alongside a stablecoin to become eligible for network duties, providing an economic commitment to ensure correct participation in threshold decryption and key generation ceremonies. Bonded tokens are subject to protocol-defined withdrawal periods and may be penalized for provable misbehavior or failure to fulfill assigned responsibilities.

• E3 Computation Requests: The token provides the economic basis for requesting Encrypted Execution Environments, which are ephemeral execution surfaces used to produce shared, verifiable outcomes from private inputs. These requests cover costs associated with forming ciphernode committees, performing distributed key generation, and coordinating the threshold-governed release of computation results.

• Protocol Governance: Holders of FOLD can participate in governance decisions through the Interfold DAO, influencing network parameters, protocol upgrades, and treasury administration. This process is expected to utilize a secret-ballot application powered by the network to preserve participant confidentiality while ensuring all outcomes are publicly provable.

The FOLD token is "redeemed" or used within the ecosystem to access the goods and services listed in G7. This occurs when a requester initiates a computation request for an Encrypted Execution Environment, utilizing the token as the economic layer to coordinate the ciphernode committee and protocol processes necessary to perform confidential coordination tasks such as sealed-bid auctions, secret ballots, or collaborative data analysis. The type of goods or services that can be redeemed may evolve over time based on ecosystem development and governance.

There are no restrictions on the transferability of FOLD at the protocol level; it may be freely transferred between users.

However, a portion of the token supply allocated to investors, the CCA auction, the Airdrop, Gnosis Guild, the team and advisors, and the Foundation Treasury is subject to contractual lock-up and/or vesting schedules.

Investor and CCA-auction allocations are subject to a 40-day post-auction cooldown from auction close, after which they become generally transferable.

The Airdrop and Team and Advisors allocations are subject to a 24-month linear unlock from TGE; the Gnosis Guild and Foundation Treasury allocations are subject to a 48-month linear unlock from the same date.

Furthermore, individual trading platforms may impose their own transfer restrictions in accordance with applicable laws and internal policies.

The supply of the crypto-asset is adjusted automatically based on predefined protocol rules. These rules include the distribution of protocol-defined incentives to ciphernode operators for successfully fulfilling network duties and the permanent removal of tokens from circulation through burning mechanisms triggered by slashing penalties or non-deterministic computation outcomes. The mechanism operates without discretionary intervention by the issuer.

The protocol manages the supply of FOLD through automated reward and deflationary mechanisms. Ciphernode operators are eligible to receive FOLD incentives for active participation in the coordination and threshold decryption of Encrypted Execution Environments. Conversely, the supply is programmatically reduced through the burning of staked FOLD if an operator is slashed for protocol violations, such as unauthorized intermediate decryption, or if a computation is found to be non-deterministic, in which case a portion of the associated bond is used to purchase and burn tokens.

There is no written legal agreement between the person seeking admission to trading and the crypto asset-holder that sets out the laws that govern the legal relationship between those two parties. In the absence of such an agreement, the law and competent court applicable to the FOLD shall be the law of the Cayman Islands, unless prescribed otherwise by applicable legislation (incl. consumer law).

There is no written legal agreement between the person seeking admission to trading and the crypto asset-holder that sets out the laws that govern the legal relationship between those two parties. In the absence of such an agreement, the law and competent court applicable to the FOLD shall be the law of the Cayman Islands, unless prescribed otherwise by applicable legislation (incl. consumer law).

FOLD is an ERC-20 token. This standard ensures industry compatibility with wallets, exchanges, and smart contracts. FOLD operates on both the Ethereum network and Arbitrum, an Ethereum Layer-2 network. The Interfold protocol, which coordinates FOLD's utility across these networks, is a distributed network of ciphernodes designed for confidential coordination, allowing independent parties to produce shared, verifiable outcomes from private inputs without data custody or exposure. It utilizes a combination of Fully Homomorphic Encryption (FHE) to compute directly on encrypted data, Zero-Knowledge Proofs (ZKPs) to verify inputs and computation, and Distributed Threshold Cryptography to decentralize key control for its operations.

As a ERC-20 token, FOLD is deployed as a smart contract. Users can hold, store, and transfer the token using any wallet software (non-custodial or self-custody) that is compatible with the Ethereum or Arbitrum network. Users may also manage the token through accounts provided by third-party custodians or centralized exchanges.

The Ethereum network, which FOLD relies on for settlement and security, operates using a Proof-of-Stake (PoS) consensus mechanism, in which validators are chosen to propose and attest to new blocks based on the amount of ETH they have staked as collateral.

Arbitrum, the Ethereum Layer-2 network on which FOLD also operates, does not run an independent consensus mechanism of its own. It uses optimistic rollup technology: transaction ordering is currently performed by a sequencer, with transaction batches posted to Ethereum for data availability and settlement. Validity is enforced through a fraud-proof mechanism, allowing a qualified validator to challenge an incorrect state transition within a defined challenge window, with final security and dispute resolution inherited from Ethereum's underlying Proof-of-Stake consensus.

Separately, at the protocol level, The Interfold coordinates its own ciphernode committees for each computation request through a deterministic sortition process weighted by the amount of FOLD tokens and stablecoins ciphernode operators have bonded as economic collateral for correct network participation.

The validators who secure the Ethereum network are rewarded with economic incentives for their work. These incentives consist of newly issued ETH awarded as staking rewards for proposing and attesting to blocks, together with priority fees (tips) paid by users to have their transactions included. Under Ethereum's fee model, the base portion of each transaction fee is burned rather than paid to validators.

On Arbitrum, the sequencer collects transaction fees from users, which cover the cost of execution on Arbitrum along with the cost of posting transaction data to Ethereum for settlement. Arbitrum does not issue a native token or pay independent staking rewards to secure FOLD transactions; the underlying security of the network continues to rest on Ethereum's validators and their Proof-of-Stake consensus, as described above.

Separately, at the protocol level, the ciphernode operators who secure The Interfold's computations are rewarded with their own economic incentives. These consist of a proportional share of the Encrypted Execution Environment (E3) computation fees paid by requesters (in FOLD), alongside other potential FOLD token rewards distributed to operators for successfully completing protocol-defined duties, such as participating in distributed key generation and performing threshold decryption within their assigned committees.

The audit was successfully completed. The audit reviewed the smart contract for the Interfold protocol's core smart contracts, specifically evaluating the InterfoldToken.sol and InterfoldTicketToken.sol files for security vulnerabilities, technical risks, and architectural integrity. The outcome was that no critical, high, or medium-risk vulnerabilities were identified during the security assessment, and the development team successfully resolved or acknowledged the twelve findings categorized as low-risk or informational.

https://zenith.security

The admission of FOLD to trading on third-party platforms involves specific risks for holders:

• Third-Party Platform Risk: Holders are subject to the terms and conditions of the trading platforms. The platform's operational disruptions (e.g., outages, cyberattacks) or a decision to delist FOLD (due to low liquidity, regulatory pressure, or internal policy) could severely impact the token's accessibility and liquidity.
• Platform Insolvency Risk: If a trading platform holding a user's FOLD tokens becomes insolvent or bankrupt, users risk the partial or total loss of those assets.
• Regulatory Risk (Platforms): Crypto-asset service providers are subject to evolving regulations. New rules could force platforms to halt trading, restrict access for users from certain jurisdictions, or delist FOLD.

The Interfold is a decentralized network and does not have a central corporate issuer, the ecosystem supporting it entails several entities, dependencies, and decentralized factors whose risks must be considered.

• Lack of Central Accountability: With no central issuer, there is no single entity legally obligated to support the value of the FOLD or guarantee the network's operations. While this is a core feature of decentralization, it means that in the event of a critical failure, there is no single company to hold accountable or to provide recourse. The network's continued development and maintenance rely on the contributions of the decentralized community of open-source developers; a loss of interest or funding could slow progress and affect FOLD's competitiveness.

• The Interfold Foundation: The Interfold Foundation holds a central role in funding, guiding, and encouraging development of The Interfold by managing treasury token allocations to reward ciphernode operators for completing protocol-defined duties, funding ecosystem initiatives, and supporting the continuous development of the decentralized infrastructure. The project could lose a significant portion of its momentum if the The Interfold Foundation were to face legal, operational, or financial issues, or cease operations voluntarily or due to external factors. If any of the most active community members, developers or key leadership were to leave, then a significant portion of the knowhow, experience and processes could be lost without a way for recovery. Any of the above could delay critical network upgrades, introduce vulnerabilities and result in loss of achieved competitive advantage.

• Regulatory/Legal Risks for related entities: While the The Interfold is a decentralized protocol, specific entities that support The Interfold may be subject to regulatory inquiries, investigations, limitations or sanction in the jurisdictions in which they operate. Such actions could prevent or prohibit operational, financial or other types of support of the The Interfold.

• Network Governance & Forks: Upgrades and parameter changes to the The Interfold are managed through the Interfold DAO, enabling FOLD token holders to participate in governance decisions regarding network parameters, protocol upgrades, and treasury administration through a secure secret-ballot application powered by the network itself. Disagreements among major token holders, key individuals, disputes, bad actors, on critical issues could slow down decision-making or, in extreme cases, lead to a contentious hard fork that splits the chain and community.

Holding FOLD involves risks inherent to most crypto-assets:

• Market Volatility: Crypto-asset prices are extremely volatile and subject to significant, rapid fluctuations. The value of FOLD can be influenced by market speculation, shifts in sentiment, and macroeconomic factors, and may not reflect the project's fundamentals. There is no guaranteed price floor, buyback or redeemability mechanism, which means that acquiring the FOLD may result in total loss of the invested amounts.
• Liquidity Risk: The market for FOLD may lack depth and liquidity. It may be difficult to buy or sell large quantities at a desired price, or at all, leading to significant financial losses.
• Custody & Private Key Risk: Holders are responsible for securing the private keys to their wallets. The loss, theft, or compromise of these keys will result in the irreversible loss of all associated FOLD tokens, with no recourse.
• Regulatory Risk: The legal and regulatory treatment of crypto-assets is uncertain and evolving. Future regulations could impose restrictions on the holding, use, or trading of FOLD, or it could be classified in a way that adversely affects its value or legality.
• Utility Risk: The expected utility of the FOLD token within the Interfold ecosystem may fail to materialize due to low user adoption, technical failures, or superior competing projects, undermining its fundamental value proposition.

The future success of the The Interfold ecosystem is subject to significant implementation risks:

• Adoption & Competition Risk: The project may fail to attract a sufficient number of users, developers, and participants to create a viable ecosystem. It faces competition from other projects that may have substantially greater financial, technical, and marketing resources.
• Roadmap & Development Risk: The project may experience delays, fail to deliver on its published roadmap, or encounter unforeseen technical complexities. Strategic shifts or "pivots" may result in features that do not align with community expectations.
• Funding & Treasury Risk: Continued development depends on the effective management of the project's treasury. A shortfall in funding or misallocation of resources could slow or halt ecosystem development.
• Governance Risk: For decentralized projects, governance "deadlock" or misalignment of incentives among participants can impede critical network upgrades and strategic decisions.

The FOLD token and The Interfold platform rely on complex, emerging technology, which introduces specific risks:

• Smart Contract Risk: The smart contracts for FOLD and the ecosystem's applications may contain hidden bugs, flaws, or vulnerabilities, whether or not they have undergone third-party security audits (see H.8/I.6 — audit status not independently confirmed as complete). Such flaws could be exploited by malicious actors, potentially resulting in the theft or irreversible loss of funds.

• Underlying DLT Risk: The project relies on the security and performance of the underlying Ethereum network. This network is subject to its own risks, such as network congestion, high transaction fees, consensus failures (e.g., 51% attacks), forks, or operational halts. Execution of transactions requires gas fees, which are subject to market conditions and may fluctuate during periods of high activity. Users who interact with FOLD via decentralized exchanges (DEXs) may face exposure to front-running or Maximal Extractable Value (MEV), where third parties reorder or insert transactions for their advantage.

• Cryptographic Risk: The protocol depends on the correctness and continued security of fully homomorphic encryption (FHE), zero-knowledge proofs (ZKPs), and distributed threshold cryptography (DTC), all comparatively advanced and still-maturing cryptographic techniques. A flaw or future cryptographic break in any of these primitives could compromise the confidentiality or integrity guarantees the protocol is designed to provide.

• Bridge Risk: FOLD exists on multiple blockchains. The bridges connecting them are a critical vulnerability. An exploit of a bridge protocol could lead to de-pegging or unrecoverable lo

• Cybersecurity Risk: The ecosystem, including its protocols and front-end applications, is a target for cyber-attacks (e.g., DDoS attacks, hacks, phishing). A successful attack could disrupt services or lead to a loss of user assets.

• Scalability Risk: The underlying technology may not scale effectively to handle a high volume of concurrent computation requests, leading to slow performance and high fees, which would deter adoption.

Interfold Ltd. has implemented several measures to mitigate the identified risks:

• Security Audits: Commissioning security audits from reputable, independent third-party security firms.

• Regulatory Monitoring: Actively monitoring the global regulatory landscape with the assistance of external legal counsel to ensure compliance with applicable laws.

• Use of Reputable Technology: Building on a secure and battle-tested DLT (Ethereum) to leverage its established consensus mechanism and security.

• Decentralized Governance: Implementing a decentralized governance framework, administered through the Interfold DAO, to distribute decision-making and align stakeholder incentives for the long-term health of the protocol.

• Strategic Partnerships: Strategic partnerships and exchange listings are pursued to improve liquidity and operational resilience.

The Ethereum network, which FOLD relies on for settlement and security, operates using a Proof-of-Stake (PoS) consensus mechanism, in which validators are chosen to propose and attest to new blocks based on the amount of ETH they have staked as collateral.

Arbitrum, the Ethereum Layer-2 network on which FOLD also operates, does not run an independent consensus mechanism of its own. It uses optimistic rollup technology: transaction ordering is currently performed by a sequencer, with transaction batches posted to Ethereum for data availability and settlement. Validity is enforced through a fraud-proof mechanism, allowing a qualified validator to challenge an incorrect state transition within a defined challenge window, with final security and dispute resolution inherited from Ethereum's underlying Proof-of-Stake consensus.

Separately, at the protocol level, The Interfold coordinates its own ciphernode committees for each computation request through a deterministic sortition process weighted by the amount of FOLD tokens and stablecoins ciphernode operators have bonded as economic collateral for correct network participation.

The validators who secure the Ethereum network are rewarded with economic incentives for their work. These incentives consist of newly issued ETH awarded as staking rewards for proposing and attesting to blocks, together with priority fees (tips) paid by users to have their transactions included. Under Ethereum's fee model, the base portion of each transaction fee is burned rather than paid to validators.

On Arbitrum, the sequencer collects transaction fees from users, which cover the cost of execution on Arbitrum along with the cost of posting transaction data to Ethereum for settlement. Arbitrum does not issue a native token or pay independent staking rewards to secure FOLD transactions; the underlying security of the network continues to rest on Ethereum's validators and their Proof-of-Stake consensus, as described above.

Separately, at the protocol level, the ciphernode operators who secure The Interfold's computations are rewarded with their own economic incentives. These consist of a proportional share of the Encrypted Execution Environment (E3) computation fees paid by requesters (in FOLD), alongside other potential FOLD token rewards distributed to operators for successfully completing protocol-defined duties, such as participating in distributed key generation and performing threshold decryption within their assigned committees.

Data provided by CCRI; all indicators are based on a set of assumptions and thus represent estimates; methodology description and overview of input data, external datasets and underlying assumptions available at: carbon-ratings.com/dl/whitepaper-mica-methods-2024 and docs.mica.api.carbon-ratings.com. We do not account for any offsetting of energy consumption or other market-based mechanism as of today.