Risk Disclosure Statement

1. Introduction

1. Interpretation

   This Risk Disclosure Statement forms an integral part of Gearbox Terms of Service (the “Terms”), which are incorporated by reference herein. Unless otherwise provided in this Risk Disclosure Statement, capitalised terms used in this Risk Disclosure Statement have the meaning determined in the Terms.

2. Acceptance

   By using the Platform, you accept the risks listed below. The list is neither exhaustive nor ranked. Any of these risks may cause damage or total loss of your assets, for which you are solely responsible. If you do not accept these risks, do not use the Platform or transact.

2. General Blockchain Risks

1. Irreversibility

   Blockchain transactions, initiated via the Platform or otherwise, are submitted to the relevant blockchain network, where they become irreversible and final. We are not a counterparty to any transaction you initiate through the Platform, and do not guarantee that any such transaction will be executed with the gas fees you expect, completed, processed on time, or processed at all. You must independently assess risks and make informed decisions before carrying out any transactions.

2. Autonomy of Infrastructure

   Blockchain-Based Infrastructure operate autonomously and are typically beyond anyone’s control. The Platform cannot intervene in the execution of Smart Contracts, and, as such, any errors or failures within the Smart Contracts are not remediable by us. Any malfunction, breakdown, or abandonment of the underlying blockchain could significantly impact the Platform, the Protocol, Virtual Assets, or any transactions involving them.

3. Privacy and Data Risks

   Blockchain data is publicly accessible and traceable by third parties, meaning transactions in Virtual Assets may expose certain information about you, though it is unlikely to directly reveal your identity. However, when combined with other personal information, it may allow third parties to infer your financial standing. Once recorded, blockchain data cannot be altered or deleted, making the decision to transact entirely your responsibility.

4. Risk Associated with Hard Fork

   A hard fork in the blockchain underlying the Smart Contracts, their components, or any Virtual Assets may affect their operability, compatibility, or support. It could require major software changes or the discontinuation of related services. Such changes may render Smart Contracts incompatible, impractical, dysfunctional, or more costly to use, disrupting their execution on the Platform and Protocol. Adapting to a hard fork or new consensus rules may demand significant time and resources, which may not be feasible. As a result, the continued operation of the Platform and Protocol cannot be guaranteed.

5. Risk Associated with Cryptography Development

   Advances in cryptography and technology, particularly quantum computing, could threaten blockchain systems by weakening or breaking the cryptographic consensus mechanisms that underpin them. As quantum computing evolves, algorithms once considered secure may become obsolete, leaving systems that rely on traditional cryptographic methods vulnerable. This could allow intruders to bypass existing security measures, compromise data integrity, as well as disrupt consensus mechanisms on blockchain networks.

6. Bridge and Cross-Chain Risks

   If you use bridges or cross-chain protocols to interact with Virtual Assets across different blockchain networks, you understand these mechanisms are frequently the subject of security exploits and rely on trust-minimised or third-party governance models beyond our control. We do not control or audit such Third-Party Services and systems, and you bear full responsibility for any loss arising therefrom.

7. Gas Fee Volatility

   Gas fees necessary for executing transactions on blockchain networks are variable and may rise sharply during periods of high demand or congestion. There is no guarantee that transactions will be executed even if submitted, and failed transactions may still incur gas costs.

8. Slippage and Execution Risks

   Due to the nature of decentralised order matching and liquidity provisioning, transactions may experience slippage, price impact, or delayed execution. You may receive less favourable rates or outcomes than anticipated.

3. Financial and Market Risks

1. Risk of Loss

   Transacting with Virtual Assets involves the risk of monetary or other losses. These risks can arise from various factors, including market volatility, vulnerabilities in Smart Contracts, cybersecurity threats such as hacking or phishing attacks, technical failures, regulatory changes, etc. Unforeseen events, including economic downturns, changes in market sentiment, etc, could also have a material adverse effect on your assets.

2. Virtual Assets’ Value Risks

   We make no promises or guarantees about Virtual Assets, and expressly disclaim all implied warranties, such as merchantability, fitness for a purpose, or non-infringement. You acknowledge that Virtual Assets may: (i) not meet your expectations or work as intended; (ii) lack the expected functionality; (iii) have no market; (iv) have no set price, stable value, or any value at all. There is no guarantee of recovery for lost or devalued Virtual Assets. Receiving, storing, using, or disposing of Virtual Assets is entirely at your own risk.

3. Volatility Risks

   Buying, holding, or using Virtual Assets is highly risky. The crypto market is very volatile, and prices can rise or fall sharply in short periods, possibly causing you to lose some or all of your funds. Price swings may result from market sentiment, global economic conditions, regulations, or even manipulation. Because of how blockchain Smart Contracts work, the supply of Virtual Assets may increase through patches, code upgrades, or new minting. This could affect the composition, supply, price, or value of Virtual Assets. You alone are responsible for any losses or damages resulting from these changes. Only commit funds you can afford to lose.

4. Liquidity and Market Risks

   There is no assurance that an active market will exist now or in the future for buying or selling Virtual Assets. Their price and liquidity cannot be assured, and it is possible that there may be no market or liquidity for Virtual Assets at all. They may lack sufficient trading volume, leading to an inability to exit positions or realise value. Virtual Assets have no inherent value or guarantee of liquidity, and, in some cases, they may become illiquid, useless or entirely worthless.

4. Risks Associated with the Platform

1. Decentralised Governance Risks

   The Platform and/or Protocol may be subject to decentralised governance decisions made by GEAR DAO or depend on third-party Smart Contacts and protocols, which may implement changes, upgrades, or alterations to logic, fee structures, or transaction rules without prior notice. These changes are outside our control and may materially alter your ability to access or interact with the Platform and its features.

2. Oracle Risks

   Certain Platform and Protocol components may rely on external oracles for data feeds (e.g., price or time information). Oracles can be manipulated, malfunction, or fail to deliver accurate data. Furthermore, manipulated or faulty oracle inputs may cause Smart Contracts to behave unpredictably or settle incorrectly. All the foregoing may potentially result in incorrect transaction execution or loss of Virtual Assets.

3. Protocol Risks

   The Protocol allows Market Curators to create and deploy Markets, which may be further showcased within the Platform; however, we do not endorse, control, or audit the Protocol and Markets in any way. There is no warranty or representation, express or implied, regarding the Protocol and its performance. The Protocol may not function as intended, be suitable for any purpose, or remain secure or error-free. We neither develop, manage, or operate the Protocol, nor endorse, recommend, or solicit its use.

4. Public Interest Uncertainty

   Public interest in the Platform is not warranted, and low user engagement may negatively impact its development and associated business activities.

5. Risk of Confusing Interface

   The user interface, design of the Platform or associated infrastructure may sometimes cause confusion, leading to unintended actions or transactions, such as selecting the wrong Virtual Asset, transaction type, blockchain network, or account.

6. Risk of Unofficial Projects

   There is always a risk of alternative projects or competing teams, including those creating similar products or cloning the Platform and its components, which could negatively affect the Platform and us. Additionally, you may be targeted by fraudulent activities, including fake websites, emails, text messages, or social media accounts impersonating us or the Platform. They may aim to deceive you, steal your Virtual Assets, or otherwise profit unlawfully. Exercise extreme caution when interacting with websites, emails, text messages, and social media accounts, directing you to sources other than the official Platform-associated websites or applications, or those asking you to connect your Wallet. Always verify the authenticity of any communication claiming to represent us or the Platform.

5. Technological Risks

1. Functionality and Flawed Logic of Software

   The Platform, Protocol, and associated Blockchain-Based Infrastructure are provided “as is” and may experience system failures, downtimes, unplanned interruptions in their underlying networks or functionality, hardware or software defects, security breaches, or other causes that could adversely affect the Platform and Protocol, its components or your access to them. We are neither obligated to address these issues nor commit to ongoing development, maintenance, or bug fixing for the Platform or any components of Blockchain-Based Infrastructure it relies on. There is no warranty that any updates will resolve existing bugs or vulnerabilities, or avoid creating new, unanticipated issues.

2. Software Weaknesses, Bugs and Vulnerabilities

   The Blockchain-Based Infrastructure, as well as underlying logic of blockchain networks of its on-chain components or Virtual Assets, may contain weaknesses, flaws, bugs, vulnerabilities, defects, or impairments. This can cause the software or Smart Contracts to operate incorrectly or not as expected, potentially resulting in transactions being executed contrary to their intended logic or your intents. Such issues can lead to the partial or complete loss of Virtual Assets involved in a transaction or other adverse outcomes.

3. Lack of Remediation

   The Platform, Blockchain-Based Infrastructure, and their underlying software may have errors or vulnerabilities that are not immediately apparent. Fixing these issues can be difficult and may not always work. Many Smart Contracts are also immutable, meaning they cannot be changed once deployed. Attempts to fix flaws or vulnerabilities in blockchain software can be complex, risky, expensive, and time-consuming. There is no guarantee that these efforts will prevent negative outcomes, such as the complete or significant loss of your Virtual Assets.

4. Downtime and Maintenance

   The Platform-related services, products, or their components may occasionally become inaccessible or inoperable for various reasons, including maintenance, updates, technical disruptions, or third-party interference. Such occurrences may lead to downtime or a lack of access to them.

5. Delayed Updates

   We are not obligated to implement or respond to any software upgrades, hard forks, or changes in the source code of the Blockchain-Based Infrastructure or its components the Platform relies on. Accordingly, there is no warranty that the software the Platform relies on will be updated quickly enough to address new threats, vulnerabilities, or required changes, or can be updated at all. Delays in updates can leave you exposed to risks such as errors, failed transactions, inability to execute time-sensitive operations, or the loss of Virtual Assets.

6. Use of Experimental Features or Beta Releases

   Certain features or functionalities may be released on an experimental or beta basis. These may contain bugs, errors, or unexpected behaviours and should be used cautiously. Experimental features may not be subject to rigorous security audits and are provided solely for exploratory purposes. Your use of any experimental features is entirely at your own risk.

6. Security Risks

1. Risk of Theft

   The blockchain networks can be attacked which may result in downtime, consensus split, long reorganisation of the chain, 51% attack or other adverse outcomes. There is no warranty that there will be no theft or loss of Virtual Assets due to attacks, hacks, software flaws, or blockchain vulnerabilities, and all losses resulting from any security breaches, regardless of their cause, are borne solely by you. Even when using our official resources, remain vigilant for pop-ups or unusual program behaviour, as these could result from hacks or malicious code.

2. Exploitation of Vulnerabilities

   Bugs, logic flaws, and other vulnerabilities are not part of the intended operation of the Platform and underlying Blockchain-Based Infrastructure. However, attackers may exploit these weaknesses, leading to financial loss, data breaches, or system failures. Exploiting bugs or vulnerabilities in the Platform and underlying Blockchain-Based Infrastructure is strictly prohibited under all circumstances. Such acts, especially those causing harm, may constitute criminal or other legal offences and result in severe consequences.

3. Risk Associated with Credentials

   If a third party gains access to your Wallet or associated credentials, they may control and use your Virtual Assets held in such Wallet. To reduce this risk, secure your electronic devices or systems (both hardware and software) used in relation to the Wallet, as well as associated credentials against unauthorised access. We encourage you to properly back up all credentials associated with your Wallets used in connection with the Platform.

7. Risks Related to Materials

1. Accuracy

   There is no assurance that any Materials will be true, accurate, complete, timely, or non-misleading, and you expressly acknowledge and agree that we will be under no obligation to update or fix them. You shall solely evaluate all information provided by us or on our behalf.

2. Risk of Impersonation

   Reliance on the Materials, whether in whole or in part, and any use of them, is entirely at your own discretion and risk. Always verify that any information you believe to be from us is posted or communicated by our authorised representatives. Be cautious of impersonation risks, including fake websites, counterfeit tokens resembling legitimate Virtual Assets, and fraudulent social media accounts and communications. Always ensure you are interacting with legitimate and verified sources. Verify information independently before acting.

3. Forward-Looking Statements

   The Materials may contain opinions, forecasts, projections, future plans, or other statements about the Platform and our business activities, excluding statements of historical fact. These are considered forward-looking statements based on current expectations and involve risks and uncertainties. There are no warranties that these statements will be accurate, and actual events, results, or outcomes may differ significantly. Do not place undue reliance on such statements. Risks and uncertainties may arise from economic conditions, competition, technical issues, and other factors affecting us, Affiliates, and the Platform.

4. Updates

   The Materials may be updated from time to time with or without notice depending on various circumstances, including market conditions, applicable regulation, and governments’ actions.

8. Third-Party Interaction Risks

1. Market Risks

   The Platform allows you to transact in, or otherwise interact with, the Markets. We are neither manager nor administrator or operator of the Markets, and are not responsible for their performance. Markets are created and managed by Market Curators, who are not vetted, monitored, or guaranteed by us. We are not responsible for their disclosures, management practices, or compliance. There is no assurance that any information and data associated with any Market are accurate, true, correct, up-to-date, complete or not misleading, or that your interaction with any Market will be profitable or suitable for you. There is always a risk that the Market may not perform as intended or represented, or meet your expectations. You shall conduct your own research and due diligence on each Market which you are willing to transact in or otherwise interact with.

2. Counterparty Risks

   You should always be diligent when dealing with third parties regarding Virtual Assets. Such third parties may include, without limitation, exchanges, Wallet operators, Curators, etc. Interactions with third parties carry risks, including fraud, insolvency, contract breaches, or security failures, which could result in the loss of your Virtual Assets.

3. Inaccurate Data

   The Platform may rely on and derive certain information from third-party data sources in an automated manner, such as the Smart Contracts, third-party APIs, Markets, etc. This information is not manually verified or checked, and as a result, it may be incorrect, incomplete, outdated, inaccurate, or insufficient. In certain situations, immediate action may be required, and timely analysis of the available data is essential for making informed decisions. However, delays in the delivery of necessary information may occur, posing an inherent risk. The inability to act promptly due to such delays could result in partial or complete loss of Virtual Assets. You should always exercise caution when relying on any third-party data.

4. Delegated Transaction Risk

   If you use services involving delegated transaction execution (e.g., gasless transactions), you acknowledge that the relayer or intermediary may fail to broadcast or manipulate the transaction in ways not intended. Furthermore, you may encounter censorship, delays, or non-execution depending on the relayer's integrity and reliability. You bear the sole risk of loss or manipulation.

5. Risk of Third Parties Acting Late

   Certain functions within the Platform may be performed by third parties. There is a risk that these third parties may not act in a timely, reliable, or intended manner, or may fail to act altogether. Such failures could result in temporary or permanent inaccessibility of the Platform or Protocol’s functionality or partial or complete loss of the associated Virtual Assets.

9. Regulatory and Compliance Risks

1. Legal Uncertainty

   The Platform may be subject to various laws and regulations, including requirements to obtain licences or other permits as directed by applicable laws. Changes to these laws or evolving interpretations could lead to higher compliance costs or operational challenges, potentially impacting our operation, as well as the platform development and operation. The legal status of Virtual Assets and related transactions is uncertain, and some regions may prohibit owning or transacting with them entirely, which could affect you. The penalties for violating such laws, if any, are unclear. You are solely responsible for researching and understanding the legal and tax implications of interacting with Virtual Assets in your jurisdiction, as well as determining whether your use of the Platform complies with all applicable laws.

2. Taxation

   ​​Any acquisition, use, holding, or disposal of Virtual Assets, as well as related transactions, may have tax implications as imposed by state or government authorities. Tax laws for Virtual Assets may be unclear or not well-defined in your region. Additionally, these laws and their interpretations can change and may even be applied retroactively. You are solely responsible for understanding and meeting your tax obligations. Failure to properly report, collect, or pay Taxes could result in penalties, fines, or other legal consequences.

10. Unanticipated Risks

By using the Platform, you acknowledge the possibility of unknown, novel, or systemic risks not described herein, including risks arising from technological innovation, new attack vectors, or market disruptions. Further risks may materialise as unanticipated combinations or variations of the discussed risks or the emergence of new risks.