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Risk Disclosure Statement
Last updated: September 18, 2023
This risk disclosure statement does not disclose all of the risks and other significant aspects of trading in Cryptoasset options. In light of the risks, you should consider the following points before engaging in any trading strategy.
Any capitalized terms not defined herein shall have the meaning set forth in User Terms and LP Terms.
Please read this Risk Disclosure and any documents expressly incorporated in them carefully before accessing the Platform or any part of the Services offered by DVX. By accessing and using the Services you agree that you read, understood and accepted the risks related to using the Services.
You are not permitted to access the Services if you are a Restricted Person and/or from a Restricted Territory and are responsible at all times for your compliance with Applicable Laws.
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Trading can be extremely risky. Trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the Cryptoassets that you use for Trading. Options and underlying Cryptoasset prices can experience significant and unpredictable changes, causing rapid shifts in the value of your Cryptoassets. Unpredictable price fluctuations may result in the increase or decrease of the value of your Cryptoassets at any given moment or result in a total loss of Crytoassets.
Be cautious of claims of large profits from Trading. You should be wary of advertisements or other statements that emphasize the potential for large Trading profits. Trading can also lead to large and immediate financial losses.
Trading requires knowledge. Trading requires in-depth knowledge of the markets and trading techniques and strategies. You should undertake such transactions only if you understand the nature of Cryptoassets and the options strategies into which you are entering and the extent of your exposure to risk. In attempting to profit through trading, you must compete with both lay and professional traders.
Trading requires knowledge of a firm’s operations. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly or at a reasonable price. This can occur, for example, when the market suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile an Cryptoassets is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures. Due to the nature of cryptocurrencies, there can be situations where DVX would decide to close contracts prematurely to maintain the integrity of the Platform. Users of the Platform are assumed to understand those risks.
Trading requires knowledge of Cryptoassets. Trading Cryptoassets also has special risks. Cryptocurrencies are backed by technology and trust. There is no central bank that can take corrective measures to protect the value of Cryptoassets in a crisis or issue more currency. Traders put their trust in a digital, decentralized and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity. Cryptoasset trading is susceptible to irrational bubbles or loss of confidence, which could cause a collapse in demand relative to supply.
Trading will generate commissions. Generally you will pay a fee on each trade. The total daily fees that you pay on your Trades will add to your losses or reduce your earnings.
Trading requires knowledge of Options and Derivatives. As with any assets, there can be a substantial risk of losing funds when buying, selling, holding, or investing in options with Cryptoasset underlying assets, or options with underlyings other than Cryptoassets. Before placing any trade via the Platform, you should carefully consider your financial position, risk tolerance and investment objectives and decide whether trading on the Platform is suitable. You should seek advice from a financial advisor if unclear on any matters. DVX does not provide any investment, legal or tax advice and does not assume any liability with respect to the use of the Platform or the Protocol.
Settlement May Differ From TradFi Options. Options on the Platform are different from traditional options. There may be a discrepancy between the settlement amount and the payoff of a traditional option, which is driven by our Protocol. Sometimes this discrepancy is in favor of the Trader and sometimes it is not. As long as the underlying Cryptoasset ends up within an expected price range that covers 99.9% of the lognormal distribution, the impact is expected to be negligible and the payoff will closely approximate that of the legacy option. If the underlying Cryptoasset ends up outside this range, it is possible for the settlement amount to be significantly lower than with a traditional option. This is expected to happen less than 0.1% of the time.
Options Are Settled in Cryptoasset. All options are settled in Cryptoassets (“base currency”) and DVX makes no representation as to the value of the base currency. When the base currency is a stablecoin, DVX cannot guarantee that the stablecoin will maintain its peg relative to the reference value.
Oracle. All Trades are being settled on the basis of the value of the underlying Cryptoasset as determined from the Coinbase Oracle or, at our sole discretion, another reputable oracle if Coinbase is unavailable or malfunctioning. The value provided by the Oracle is final and cannot be reversed. This value may differ from that on other decentralized exchanges and centralized exchanges, which could potentially impact the settlement amount. The data used to determine options prices and/or option settlement may be imprecise or unreliable, potentially leading to incorrect pricing and subsequent losses. When the value of the oracle is in fiat currency, the Protocol uses a 1:1 conversion ratio between fiat and the corresponding stablecoin pegged to fiat that may be used as base currency for settlement purposes. If the Oracle is unavailable for whatever reason, settlement may be delayed. Settlement of a trade will happen at the earliest opportunity and may require that DVX determine the price of the relevant underlying Cryptoasset for settlement at its sole discretion with reasonable reference to another reputable oracle if Coinbase is unavailable or malfunctioning. The settlement method and the Oracle may be changed at any time.
Trading May Not Be Available. There is no guarantee of 100% availability of the Platform. It may not be possible to trade, and specific options may not be available if the Blockchain is not operational or malfunctioning. If a trader bought an option and is unable to close the position before expiration by selling it back because the Blockchain is not operational or malfunctioning, the option will be settled at expiration or at the earliest opportunity after the Blockchain is operational and functioning as intended.
Settlement May Be Delayed. An option may not be timely settled if the Blockchain is not operational or malfunctioning. The Product will be settled at the earliest opportunity after the Blockchain is operational and functioning as intended. DVX may be required, and in any case reserves the right, to determine the price of the relevant underlying Cryptoasset for settlement at its sole discretion with reasonable reference to the Oracle.
Liquidity Risk. During periods of low liquidity, you may be unable to buy or sell options at your preferred price, which may lead to less favourable pricing.
Market Risk. The market for Trading options can undergo substantial price or liquidity fluctuations, affecting the worth of your trades.
Technology Risk. DVX utilises emerging technology, which may be susceptible to hacking, cyberattacks, and other security vulnerabilities that have yet to be discovered. Such risks may affect your digital assets and may result in the loss of your digital assets or the loss of your ability to access or control your Cryptoassets for which you may be unable to obtain any remedy or compensation. Any third Party that gains access to your private login credentials to your trading account, the private key to your Blockchain Address or other wallet used to manage your assets may be able to transfer your Cryptoassets.
Regulatory Risk. Regulatory scrutiny may impact DVX’s ability to provide the services or access to the Protocol or the legality of trading options on the Platform.
Operational Risk. Smart contracts are vulnerable to bugs and other operational issues. Audit of our smart contracts is pending. While our development team has worked very hard to ensure there are no issues, due to the complexity of the code there is a higher than average likelihood of errors. There is always a risk of a smart contract vulnerability, or that the Protocol will not perform as expected. Such risks may affect the Protocol’s performance and the value of your options resulting in you being unable to recover your digital assets or funds. This could result in significant losses or even in a total loss of funds through normal Trading activity.
Liquidity Provisioning. The returns associated with a given Liquidity Pool are determined by algorithmic methods determined by the Protocol over which DVX does not have full ongoing control. Such yields, as well as any yield associated with a given Liquidity Pool, is an indication of cumulative past performance since the start date for the relevant Liquidity Pool, which means that there can be no guarantee whatsoever of positive returns and losses are possible. The Pool Token must be returned by you to withdraw a deposit, adjusted for profit/loss. The market for trading Products can undergo substantial price or liquidity fluctuations, affecting the worth of your Pool Tokens. Depending on Trading activity, you may be unable to buy or sell Pool Tokens at your preferred price. You understand and acknowledge that withdrawals are processed during the Pre-Trade Window and may sometimes be disallowed or limited during a given Product’s Trade Window.
Analytics. We do our best to offer the best analytics we can, and address any bug or flaw as soon as possible. We will not be liable for any consequences resulting from any bug or defect. We make updates of the Platform available at our sole discretion and on a best efforts basis. Further, manage your own account portfolio at your own risk. Trading entails a high financial risk. You acknowledge, agree and accept that any risk, loss or damage arising from the use of the Platform for Trading activities or otherwise (whether on the Protocol or other platform) is solely on your own account. We will not be liable for any losses resulting from trades placed in reliance on any data, graphs, indicators or any other information made available on our analytics platform.