Risks

Plain-language, no fine print. If anything here is unclear, ask in the TG community group before depositing.

For option buyers. You can lose 100% of the premium paid — this is the normal, expected outcome for out-of-the-money expiries, not an edge case. Payouts are capped: you will not be paid for the portion of a move beyond 5% above your strike. Settlement uses an oracle price at a fixed time; a favorable price five minutes before expiry that reverses by the settlement print pays nothing.

For dCDS depositors.

• Market risk on your own asset. An ETH deposit falls in dollar value when ETH falls, exactly as holding would. Premiums cushion this; they don't remove it.

• Capped payout risk. When markets rally past strikes, in-the-money payouts are deducted from the pool. Because the pool underwrites more contract notional than raw deposits (made safe by the cap), a strong rally can cost a meaningful fraction of your deposit's asset balance — bounded, displayed live as your "worst case," but real. In a maximum scenario where every live contract pays its cap, your deposit is reduced to the worst-case figure shown on your dashboard, plus all premiums earned.

• Liquidity windows. Funds backing live options are locked until that expiry settles. With short-dated options this is days, but it is not instant.

• Smart contract risk. Contracts are audited by Sherlock (see Audits & Contract Deployment) but audits reduce risk, never eliminate it. Never deposit funds you cannot afford to lose.

• Oracle risk. Settlement depends on oracle prices. Oracle failure or manipulation, while mitigated by using established feeds, is a non-zero risk inherent to all on-chain derivatives.

What cannot happen, by design. The pool cannot owe more than it holds — every option's maximum payout is reserved against pool capacity when sold, enforced on-chain. Buyers cannot be liquidated or margin-called. Depositors cannot lose more than their deposit.