Disclaimer

• Funding risks:

While funding rates are generally positive over the past few years, there are times when funding rates trade negative

• Liquidity and margin risk:

While return on the basis trade is virtually guaranteed over the long term, short-term fluctuations can lead to significant losses as seen in highly leveraged positions in both traditional markets or crypto markets. The protocol’s strategy is exposed to similar risk

• Collateral Risk:

The protocol has the option to hold staked tokens or liquid staked tokens (LST) in various tokens, rather than solely relying on the native token. This strategy aims to generate additional yield. However, there is a risk: if the prices of these assets deviate from their peg, it could result in the collateral value falling below the required margin for the delta-neutral strategy

• Exchange risk:

The protocol intends to utilize Off-Exchange Settlement providers with no collateral being deposited with any exchange.

The protocol also intends to utilize technology such as MPC wallets to mitigate Defi risks to a certain extent

The protocol further diversifies the risk and mitigates the potential impact of exchange failure by utilizing multiple exchanges.

• Custodial risks:

As assets are stored with off-exchange settlement providers and MPC wallets, there are inherent custodial risks if the custodian were to become insolvent