> For the complete documentation index, see [llms.txt](https://docs.krillprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.krillprotocol.com/krill-protocol-docs/legal-and-compliance/howey-test-analysis.md).

# Howey Test Analysis

Under US securities law, the Howey Test determines whether an asset or arrangement is an investment contract based on 4 criteria. Krill invalidates criterion ④ (**"Expectation of profits derived from the efforts of others"**) via 5 code-enforced constraints:

1. **UpgradeCap Destroyed (`G6 Immutable`)**: The team cannot modify contract logic post-deployment, eliminating reliance on ongoing managerial effort.
2. **No Asset Levers (`D43`)**: Code lacks functions for `expire_*`, `destroy_*`, or `revoke`, preventing operator intervention.
3. **Universal Baseline Yield (`D44`)**: Automated 22% yield allocation removes discretionary managerial distribution.
4. **Whale Allocation Bound (`D50.3`)**: Caps top tier takeover at 100x baseline.
5. **Referral Time Window (`D45`)**: 12-month limit prevents perpetual multi-level securities dynamics.


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