Risks

(1) credit risk -- Structured trades with market makers who may default. We choose accredited MMs who pass KYC and who have a history of credit worthiness. Much of this risk is mitigated by requiring significant or full collateralization of short option positions, and cash purchase of long positions;

(2) principal at risk -- investors are taking either a bullish or bearish perspective towards crypto markets. Vaults are risk-managed and losses in any given Epoch are limited. However, if markets move against an investor’s position, especially over continuous Epoch cycles, the investor may lose some portion of their initial investment;

(3) smart contract risk -- Smart contracts are audited and their designed is verified by third parties (see Audits section). Risk mitigation practices are introduced. Those include active smart contract and accounts monitoring, and the ability to “pause” vaults. All critical actions need multiple signatures to be performed, by authorized principals. All user actions are recorded and tracked. Treasury funds are managed by MPC and multisig based wallets.