Staking Disclosure

BitLease Technologies Ltd. A subsidiary of 49G Holding Incorporated in Abu Dhabi Global Market (ADGM), ADGM Registration No.: 34619

Last Updated: 21 March 2026

Effective Date: 21 March 2026

Version: 1.0

1. Introduction

1.1 Purpose

This Staking Disclosure (“Disclosure”) describes the LTO Staking Delegation service offered on the BitLease Platform, including its nature, mechanics, risks, fee structure, and limitations. It is provided to ensure that Clients make informed decisions about whether to participate in staking.

This Disclosure should be read in conjunction with the Terms of Service, LTO Service Agreement, Risk Disclosure Statement, and Custody & Asset Handling Disclosure.

1.2 Overview

LTO Staking Delegation allows Clients with active LTO Contracts to earn staking rewards on their escrowed digital assets by delegating those assets to proof-of-stake validators through the Platform. The service is entirely optional, user-directed, and available only for eligible Supported Digital Assets.

Staking can generate additional value from an asset already held under an LTO Contract, but it also introduces risks that do not exist without staking. This Disclosure explains both sides so you can decide whether participation is appropriate for you.

1.3 Regulatory Context

Staking services on the BitLease Platform do not constitute an investment service, managed service, collective investment scheme, deposit-taking arrangement, or any form of regulated financial product unless explicitly classified as such by a competent regulatory authority in a specific jurisdiction. BitLease monitors regulatory developments regarding the classification of staking services and will adapt its operations and disclosures as required.

The regulatory classification of staking is evolving and varies by jurisdiction. In certain jurisdictions, staking-as-a-service may be subject to specific regulatory requirements. BitLease’s licensing applications in ADGM, VARA, MiCA, FCA, and MAS address staking-related activities to the extent applicable under each framework.

2. Nature of the Service

2.1 User-Directed Only

LTO Staking Delegation is activated exclusively upon the Client's explicit opt-in through the Platform. Staking is never activated by default, never assumed, and never imposed.

The Client makes an independent, voluntary decision to participate in staking after reviewing this Disclosure. BitLease does not recommend, encourage, or advise Clients to stake. The decision is entirely the Client’s.

2.2 BitLease’s Role: Execution Agent

BitLease acts solely as a technical execution agent for staking delegation. In practical terms, this means BitLease receives the Client’s opt-in instruction, delegates the escrowed asset to a staking validator through the Platform’s infrastructure, collects staking rewards from the validator, distributes rewards according to the agreed split (80% Client / 20% BitLease), and processes opt-out instructions and initiates unbonding.

It is equally important to understand what BitLease does not do in this context. BitLease does not manage, direct, or make discretionary decisions about the Client’s staking activity beyond executing the Client’s instructions. BitLease does not guarantee any return, yield, reward rate, or performance outcome. BitLease does not guarantee validator uptime, availability, or performance. BitLease does not guarantee network participation or eligibility for rewards. BitLease does not provide any representation that staking will be profitable or risk-free. BitLease does not pool Client assets for staking purposes; each Client’s staked position is tracked individually. BitLease does not exercise investment discretion over staked assets.

2.3 What Staking Is Not

Within the BitLease Platform, staking occupies a specific and limited role. Understanding what it is not is as important as understanding what it is.

Staking is not an investment product. Staking rewards are a byproduct of blockchain network participation, not a return on an investment managed by BitLease. Staking is not a deposit or savings product. Staked assets are not deposits; they do not earn “interest” in the banking sense, and they are not covered by any deposit insurance scheme. Staking is not a managed service. BitLease does not exercise discretion over the Client’s staking; the Client decides to opt in, and the Client decides to opt out, while BitLease executes these instructions. Staking is not a collective arrangement. Each Client’s staking is individual, assets are not pooled into a common staking fund, and rewards are calculated and distributed individually. Staking is not a fiduciary service. BitLease does not owe fiduciary duties to the Client in connection with staking. BitLease acts as execution agent, not as trustee, fiduciary, asset manager, or investment advisor.

3. Eligibility

3.1 Asset Eligibility

Staking is available only for Supported Digital Assets that operate on a proof-of-stake or delegated proof-of-stake blockchain, support delegation from custodial wallets (MPC-compatible staking), and have been approved by BitLease for staking delegation based on security, liquidity, and risk assessment.

As of the effective date, the following assets may be eligible for staking (subject to availability):

BitLease may add or remove assets from staking eligibility at its discretion, based on blockchain changes, security assessments, or regulatory requirements. Clients will be notified of eligibility changes.

3.2 Client Eligibility

To participate in staking, the Client must have an active LTO Contract for an eligible Supported Digital Asset, have completed all required identity verification (KYC), have reviewed and acknowledged this Staking Disclosure, and not be subject to any account restriction, suspension, or compliance review that would prevent staking.

4. How Staking Works on BitLease

4.1 Opt-In Process

The process is designed to be straightforward, with each step ensuring the Client is informed before any action is taken.

Step 1, Client Review: The Client reviews this Staking Disclosure and the associated risk information on the Platform.

Step 2, Client Acknowledgment: The Client acknowledges that they understand the risks, the fee structure, and that BitLease does not guarantee any return.

Step 3, Client Opt-In: The Client activates staking for a specific LTO Contract through the Platform interface.

Step 4, Delegation: BitLease delegates the escrowed asset to a staking validator selected per BitLease’s validator selection criteria (Section 5).

Step 5, Reward Accumulation: Staking rewards accrue based on the blockchain’s reward mechanism. Rewards are collected by BitLease and distributed per the agreed split.

Step 6, Reward Distribution: Rewards are distributed to the Client’s LTO Wallet (80%) and BitLease’s brokerage account (20%) on the schedule determined by the Platform, which depends on the blockchain’s reward distribution mechanism.

4.2 Opt-Out Process

The Client may opt out at any time. The process works as follows.

Step 1, Client Request: The Client requests opt-out through the Platform at any time.

Step 2, Unbonding Initiation: BitLease initiates the unbonding (unstaking) process on the blockchain.

Step 3, Unbonding Period: The asset enters the blockchain’s required unbonding period. During this period, the asset is not earning staking rewards, the asset remains in escrow under the LTO Contract, and the LTO Contract terms (payments, Buyout, Full Settlement) remain unchanged. The unbonding period varies by blockchain and is determined by each protocol, not by BitLease:

These periods are protocol-determined and outside BitLease’s control. They may change due to network conditions or protocol upgrades.

Step 4, Completion: Upon completion of unbonding, the asset returns to standard escrow status (non-staked) and is available for Buyout, Full Settlement, or continued holding under the LTO Contract.

4.3 Interaction with LTO Contract Events

This section explains how staking interacts with key events in the lifecycle of an LTO Contract. Understanding these interactions is important for timing decisions.

Important: If a Client initiates Full Settlement or Buyout while the asset is staked, the unbonding period must be completed before the ownership transfer or Buyout liquidation can be executed. This may add days to the settlement timeline. Clients who anticipate Full Settlement or Buyout should consider opting out of staking in advance to avoid this delay.

5. Validator Selection

5.1 BitLease’s Approach

BitLease selects validators based on institutional-grade criteria designed to minimize, but not eliminate, validator-related risks:

5.2 Limitations

BitLease chooses its validators in accordance with predetermined criteria, but it does not guarantee the performance, availability, security, or compliance of the chosen validators at any time. The choice of a validator cannot be considered as a recommendation or endorsement of any kind. The performance of the validator may differ for a number of reasons, including technological difficulties, the actions of the validator, or other factors outside of BitLease’s control.

In the event of a major validator failure, even after the application of the predetermined criteria, losses may be incurred by the users of the system. BitLease has the right to change the validator at any time without prior notice if it no longer meets the required risk standards.

6. Yield Distribution and Fees

6.1 Reward Split

6.2 “Gross Staking Rewards” Defined

Gross Staking Rewards defines the amount of reward received by BitLease after a validator has deducted its commission. The 80/20 split is therefore applied after the actual reward has been received by BitLease and before the validator deducts its commission.

For instance, if a validator has received 1.00 ETH as a reward, and it has a 10% commission, then it means that BitLease receives 0.90 ETH as a reward after the validator has deducted its commission. The Client then receives 80% of 0.90 ETH, which is 0.72 ETH, while BitLease receives 20% of 0.90 ETH, which is 0.18 ETH as a brokerage fee.

6.3 Status of Client Staking Rewards

Staking rewards, which are credited to the Client’s LTO Wallet, are treated as free assets. These are not subject to the provisions of the LTO Contract and do not affect the Outstanding Balance or any installment payments. The free assets do not affect the LTO Contract in any way, and all provisions regarding payments, termination, and other matters remain the same. The Client may withdraw the free assets at any time from the LTO Wallet.

The Client is responsible for any tax liability incurred in connection with the free assets.

BitLease does not withhold any tax on the free assets, but may provide records of the transaction for tax purposes.

The Platform determines and releases the available free assets according to a schedule. This schedule is dependent on two factors: the reward mechanisms of the underlying blockchain and BitLease's internal operational cycle.

6.4 No Guaranteed Yield

BitLease does not guarantee any staking return, reward rate, or yield.

Staking rewards are determined by the blockchain protocol and are influenced by factors entirely outside BitLease’s control, including network participation rates, protocol parameters, validator performance, and protocol changes. Rewards may fluctuate over time, decrease to economically insignificant levels, decrease to zero, or become negative in the event of slashing (net loss of staked value).

7. Comprehensive Risk Disclosure for Staking

The decision to stake introduces risks that would not exist if the Client chose not to participate. Each risk described below is real, not theoretical, and has occurred on one or more blockchain networks.

7.1 Slashing Risk

What it is: Slashing is a penalty imposed by the blockchain protocol on validators who violate the rules of the protocol, which include double-signing, downtime, or equivocating. As a result of slashing, a percentage of the overall amount of assets delegated to validators, including the Client’s escrowed asset, will be lost.

Impact on your LTO Contract:
The value of the asset will be reduced as a result of the penalty imposed during the process of slashing. The Platform Reference Price of the asset will be affected, which in turn will affect the amount of Surplus Value that the Client receives during the Buyout or termination of the contract. The Outstanding Balance of the LTO Contract will remain the same, which means that the Client will still be required to pay the same amount. The combination of the reduction in asset value as a result of the penalty imposed during the process of slashing may result in the Client receiving no Surplus Value during the Buyout or termination of the contract.

Severity varies by blockchain:

7.2 Validator Risk

Validators are operated by independent third parties, and BitLease has no control over their reliability. A validator can go offline for various reasons, including hardware failure, software failure, network failure, and operator failure. During offline periods, no staking rewards are accrued. Validators can also perform poorly by failing to make attestations or by failing to make block proposals on time, leading to reduced rewards. In rare cases, a validator operator can be malicious by engaging in behaviors such as double-signing. Lastly, a validator operator can cease operations, face legal consequences, or experience financial issues. If BitLease decides to stake its assets with a small number of validators, the failure of a single validator can have significant consequences.

7.3 Protocol and Network Risk

The blockchain layer also poses risks, which are common to every participant and not specific to the BitLease protocol. There are risks of a change in the reward structure, which might be implemented by the protocol through a governance proposal, a hard fork, or an upgrade. There might also be a change in the blockchain from proof of stake, which might impact the staking process. There might also be a risk of network congestion, which might delay the rewards, the processing of transactions, or the unbonding process. There might also be a fork, which might make it difficult to ascertain the valid blockchain, thereby duplicating the staked position. In extreme cases, there might also be a 51% attack, which might compromise the integrity of the assets.

7.4 Smart Contract Risk

When the process of staking involves smart contracts, there might be risks associated with the exploitation of vulnerabilities, bugs, or poor contract design, which might result in the loss of assets. Upgrades might also result in additional risks. It is also important to note that the BitLease protocol does not audit the third-party smart contract and, as such, cannot guarantee the integrity of the contract.

7.5 Lock-Up and Liquidity Risk

Unbonding periods are set by the underlying protocol and cannot be reduced by BitLease. During the unbonding period, the assets do not receive rewards, and the assets cannot be transferred, sold, used in Buyout, or in a Full Settlement. If a Buyout or a Full Settlement is triggered, the unbonding process will affect the timing. During periods where unstaking demand is high, the unbonding queue can be long, especially in networks like Ethereum.

7.6 Tax Risk

The taxation of rewards from staking varies across jurisdictions and is subject to some degree of uncertainty. The rewards may be subject to income tax at the time the rewards are received and capital gains tax when the rewards are spent. The deductibility of the 20% brokerage commission charged by BitLease is subject to some degree of uncertainty. Tax laws are subject to change over time.

7.7 Regulatory Risk

Regulators may consider the provision of staking-as-a-service a regulated activity, which would require BitLease to seek additional regulatory licenses to continue the provision of the service. In some jurisdictions, such services have been subject to regulatory enforcement, such as the SEC in the United States. Regulatory changes could result in the restriction, suspension, or termination of the provision of the service in some jurisdictions. BitLease will notify affected Clients in the event of such a regulatory event.

8. No Fiduciary or Advisory Role

8.1 Clear Boundaries

In relation to the LTO Staking Delegation, BitLease does not act in a fiduciary capacity. BitLease does not have any fiduciary duties, including loyalty, care, or prudence, to the Client with respect to any staking, validator, or rewards. BitLease is not an investment advisor. BitLease does not provide investment advice with respect to whether to stake, when to stake, or how staking relates to the financial plans of the Client.

BitLease does not act as an asset manager. BitLease does not have any discretionary authority over the assets of the Client with respect to any staking, except to the extent that BitLease complies with the opt-in or opt-out instructions of the Client.

BitLease does not act as a trustee. The assets of the Client that are being staked are held in escrow under the LTO Contract, subject to the terms of the LTO Service Agreement, the Custody & Asset Handling Disclosure, rather than any applicable trust law.

BitLease does not act as an insurer or a guarantor. BitLease does not provide any insurance of rewards from staking, nor any guarantee of performance of any validator, nor any protection against any loss with respect to any staking.

8.2 Client Responsibility

The Client is solely responsible for deciding whether to opt into staking, understanding the risks described in this Disclosure, assessing whether staking is appropriate for their risk tolerance, monitoring their staking status on the Platform, opting out if they no longer wish to participate, complying with their tax obligations related to staking rewards, and seeking independent professional advice if uncertain.

9. Service Modifications and Discontinuation

9.1 Modifications

BitLease reserves the right to modify the staking service at any time, including adding or removing eligible assets, changing validators or validator selection criteria, adjusting the reward distribution frequency, modifying the brokerage commission rate (with thirty (30) days' prior notice to affected Clients), and implementing additional risk controls or restrictions.

9.2 Discontinuation

BitLease may discontinue the staking service, in whole or for specific assets, at any time if regulatory requirements in a relevant jurisdiction prohibit or restrict staking services; if the blockchain protocol changes in a way that makes staking operationally infeasible or excessively risky; if validator infrastructure becomes unavailable or unreliable; if BitLease determines that the risk profile of staking for a specific asset has become unacceptable; or for other business reasons.

Upon discontinuation, affected Clients are notified with as much advance notice as practicable (minimum 14 days except in emergencies). Unbonding is initiated for all affected staked assets. Final staking rewards are collected and distributed per the standard split. Assets return to standard (non-staked) escrow status under the active LTO Contract. The LTO Contract itself is not affected by staking discontinuation.

10. Liability

10.1 Limitation

To the fullest extent possible under ADGM laws, BitLease assumes no liability in respect of any loss in staking rewards, decrease in the rate of rewards, and failure to achieve desired yields; any loss arising from slashing penalties levied by the blockchain protocol itself; any loss arising from downtime, underperformance, and/or malicious activity by validators; any loss arising from changes in the protocol, network outages, and/or other blockchain-related occurrences; any loss arising from vulnerabilities in smart contracts related to staking; any delays in the processing of opt-outs, unbonding, and/or rewards due to the limitations of the protocol itself; any loss arising from tax considerations in respect of rewards and/or the time at which rewards are received; and any loss arising from the suspension and/or termination of staking services.

10.2 Preserved Obligations

Nothing in this section limits BitLease’s obligation to distribute the Client’s 80% share of staking rewards actually received by BitLease, process opt-out instructions promptly, maintain the escrowed asset in MPC custody per the Custody & Asset Handling Disclosure, act in accordance with the LTO Service Agreement regarding the underlying LTO Contract, or be accountable for fraud, willful misconduct, or gross negligence.

11. Acknowledgment

By opting into LTO Staking Delegation, the Client confirms:

• I have read and understood this Staking Disclosure in its entirety.
• I understand that staking is entirely optional and that I am opting in voluntarily.
• I understand that BitLease acts solely as a technical execution agent and does not guarantee any return.
• I understand the risks of staking, including slashing, validator failure, yield variability, protocol changes, smart contract vulnerabilities, and lock-up periods.
• I understand that staking rewards are distributed 80% to me and 20% to BitLease as brokerage commission.
• I understand that staking rewards are free assets, do not reduce my LTO Contract obligations, and do not affect my payment schedule.
• I understand that slashing losses reduces the asset’s value and may affect Buyout or termination surplus calculations.
• I understand that unbonding periods may delay Full Settlement, Buyout, or termination execution if the asset is staked at the time.
• I understand that BitLease does not act as a fiduciary, investment advisor, or asset manager in connection with staking.
• I understand that the staking service may be modified or discontinued at any time.
• I am solely responsible for any tax obligations arising from staking rewards.
• I make this decision independently and have not relied on any representation by BitLease as advice or a recommendation to stake.

12. Contact

For staking-related inquiries:

BitLease Technologies Ltd. A subsidiary of 49G Holding Incorporated in Abu Dhabi Global Market (ADGM) Registered Address: Unit PC-1, Level 7, Al Maryah Tower, Abu Dhabi Global Market Square, Abu Dhabi, Al Maryah Island, United Arab Emirates

ADGM Registration No.: 34619

Website: www.bitlease.com