RiskDisclosure

Total Loss of Capital

When you execute an RFQ to acquire position contracts (ERC-1155 tokens), you are speculating on the outcome of future events. If the outcome resolves against your position, your contracts become worthless, and you lose your entire investment in that position. Each contract pays $1.00 USDC only if the associated outcome occurs.

No Guaranteed Returns

Unlike traditional savings or fixed-income instruments, prediction market contracts offer no guaranteed returns. The value of your position contracts depends entirely on market pricing dynamics (reflected in RFQ quotes) and ultimate event outcomes.

Leverage and Concentration Risk

• Concentrating positions in a single market amplifies potential losses
• Correlated positions across multiple markets can result in simultaneous losses
• Parlay markets combine multiple risks, increasing the probability of total loss

Opportunity Cost and Illiquidity

Capital deployed in position contracts cannot be used for other investments. Markets may take extended periods to resolve, during which your capital remains locked. While secondary market liquidity may be available through additional RFQs, there is no guarantee market makers will provide quotes on existing positions.

Price Volatility

Prediction market contract pricing (as reflected in RFQ quotes) can be extremely volatile. Market maker quotes may change rapidly based on new information, sentiment shifts, or large executed RFQs. You may not be able to exit positions at favorable prices, or receive any quotes at all during volatile periods.

Liquidity Risk

• Some markets may have limited maker participation, resulting in wider bid-ask spreads or no quotes
• Large contract positions may be difficult to exit without significant price impact
• Market makers may decline to provide quotes or withdraw entirely during volatile periods
• RFQ quotes are not guaranteed; makers have discretion to quote or decline any RFQ
• You may be unable to exit positions before market resolution

Information Asymmetry

Other market participants may possess information you do not have. Professional traders, domain experts, and well-resourced entities may have significant advantages in predicting outcomes.

Market Manipulation

Despite integrity measures including manipulability scoring and restricted person rules, markets may be subject to manipulation attempts, coordinated trading activities, wash trading, or false information campaigns that can affect market maker pricing and ultimate outcomes.

Smart Contract Risk

Blockchain Network Risks

• Network congestion may delay or prevent timely transaction execution
• High gas fees during peak usage may make small trades uneconomical
• Chain reorganizations or forks could affect transaction finality
• Base L2 relies on Ethereum L1 security assumptions

Oracle and Resolution Risks

• Oracle data sources may be incorrect, manipulated, or unavailable at resolution time
• Ambiguous market definitions may lead to unexpected or disputed resolutions
• Resolution disputes may delay contract redemption and create uncertainty
• Markets may be voided, resulting in pro-rata refunds rather than full payout
• Dispute mechanisms require bonded capital and may not succeed

Platform Risks

• Platform downtime may prevent RFQ submission or quote acceptance during critical periods
• User interface errors could lead to unintended RFQ parameters or executions
• API or WebSocket failures may affect market maker quote delivery and automated systems
• Database or infrastructure failures could impact RFQ routing and service availability
• The platform may be modified, suspended, or discontinued at any time

Wallet and Key Management

You are solely responsible for securing your wallet and private keys. Loss of private keys means permanent loss of access to your funds. We cannot recover lost keys or reverse blockchain transactions.

Evolving Regulations

The regulatory landscape for prediction markets, RFQ trading platforms, and cryptocurrency is rapidly evolving. New laws or regulations could restrict platform operations, prohibit certain market types, affect tax treatment, or require changes to RFQ routing and settlement mechanisms.

Jurisdictional Restrictions

• Prediction markets may be illegal or restricted in your jurisdiction
• Using VPNs to circumvent geographic restrictions violates our Terms of Service
• You are responsible for complying with local laws
• We may be required to restrict access from additional jurisdictions in the future

Tax Implications

Gains from prediction market contract trading may be subject to income tax, capital gains tax, or other taxes in your jurisdiction. Tax treatment of cryptocurrency transactions, RFQ executions, and prediction market outcomes varies significantly by country and may be unclear. You are solely responsible for reporting and paying all applicable taxes. Consult a qualified tax professional regarding your specific situation.

Enforcement Actions

Regulatory authorities may take enforcement actions against prediction market platforms, RFQ trading mechanisms, users, or market makers. Such actions could result in platform suspension, service disruptions, asset freezes, inability to redeem winning contracts, or legal liability. We may be required to restrict access, void markets, or modify operations to comply with regulatory demands.

Trading prediction market contracts via RFQs can trigger psychological and behavioral patterns that may lead to poor decision-making and significant losses: