#Risk Disclosure

#Overview

Exolane has been operational on Arbitrum One since August 2023. This risk disclosure is published as part of our ongoing transparency commitment. Before using Exolane, you must understand and accept the following risks. These are the key risks every trader should evaluate.

#Trading Risks

#Leverage Risk

Leverage amplifies both gains AND losses.

Your entire collateral can be lost if the market moves against your position.

#Liquidation Risk

If your position's margin falls below maintenance requirements:

• Your position will be forcibly closed
• You may lose most or all of your collateral
• You have no control over when this happens
• Stop-losses may not execute in time during fast markets

#Funding Rate Risk

While Exolane caps funding at ±15% APR, this is still a significant cost:

• 15% per year = ~1.25% per month
• Long-term positions in the wrong direction can be costly
• Funding direction can change

#Market Risk

Cryptocurrency markets are highly volatile:

• Prices can move 10%+ in hours
• Flash crashes occur
• Extreme volatility during news events
• 24/7 markets mean risk while you sleep

#Protocol Risks

#Smart Contract Risk

Exolane has undergone 7 independent security audits by Sherlock and Zellic. All critical and high-severity findings were resolved and verified by auditors:

• Core protocol, oracle integration, and collateral system audited
• All identified vulnerabilities were fixed before deployment
• Contracts are verified and publicly readable on Arbiscan
• Continuous monitoring and invariant testing in place

#Oracle Risk

Exolane uses Pyth Network with multiple protective mechanisms:

• Multiple independent price publishers with aggregated pricing
• 40-second staleness threshold — trading automatically pauses if price data becomes stale
• Liquidations are blocked during stale price conditions
• On-chain verification of all price updates

#Systemic Risk

The protocol as a whole may face risks:

• Unforeseen economic attacks
• Cascading liquidations
• Extreme market conditions
• Interoperability issues

#Technical Risks

#Blockchain Risk

Arbitrum and Ethereum may experience:

• Network congestion delaying transactions
• Sequencer downtime
• Chain reorganizations
• Bridge vulnerabilities

#Wallet Risk

Your wallet security is your responsibility:

• Private key compromise = total loss
• Phishing attacks
• Malicious approvals
• Hardware failures

#Interface Risk

The web interface may have issues:

• Bugs in the frontend
• Incorrect price displays
• Failed transactions
• Connectivity problems

#Economic Risks

#Collateral Risk

USDC is the only accepted collateral:

• USDC depegging would affect collateral value
• Circle (USDC issuer) risks
• Regulatory risks to stablecoins

#Counterparty Risk

While non-custodial, risks exist:

• Protocol insolvency in extreme scenarios
• Vault liquidity issues
• Bad debt socialization

#External Risks

#Regulatory Risk

Cryptocurrency regulation is evolving:

• Laws may change in your jurisdiction
• Access may be restricted
• Reporting requirements may apply
• Legal status may be uncertain

#Tax Risk

Trading may have tax implications:

• Capital gains taxes
• Reporting requirements
• Vary by jurisdiction
• Consult a tax professional

#What Exolane DOES NOT Guarantee

#What Exolane DOES Provide

#Risk Mitigation Strategies

While risks cannot be eliminated, you can reduce them:

#1. Use Appropriate Leverage

Lower leverage = More room for error
Start with 2-5x until experienced

#2. Always Use Stop-Losses

Define your max loss BEFORE entering
Never remove stop-loss "to give it room"

#3. Size Positions Appropriately

Risk no more than 1-2% of capital per trade
Diversify across positions

#4. Secure Your Wallet

Use hardware wallet
Never share private keys
Verify all transactions

#5. Monitor Positions

Set alerts for significant moves
Don't leave max-leverage positions unmonitored
Have a plan for various scenarios

#6. Understand Before Trading

Paper trade first if unsure
Start with small amounts
Learn from each trade

#Eligibility

By using Exolane, you represent that:

• You are of legal age in your jurisdiction
• You are not in a restricted jurisdiction
• You understand the risks involved
• You can afford to lose your investment
• You are not using borrowed funds you cannot repay

#Acknowledgment

By using Exolane, you acknowledge that:

1. You have read and understood this risk disclosure
2. You accept all risks associated with trading
3. You will not hold Exolane liable for any losses
4. Trading decisions are your sole responsibility
5. Past performance does not indicate future results

#Questions?

If you have questions about risks:

• Review our documentation thoroughly
• Ask in community channels
• Do not trade if you are uncertain