Risks & Disclosures

Last Updated: Nov 2025. Trading on PlasmaPerps involves significant financial risks. By using the platform, you acknowledge and accept these risks.

1. General Disclaimer & Living Document

IMPORTANT: The content of this document, the PlasmaPerps Whitepaper, and the Protocol specifications are subject to change at any time without notice. The development of PlasmaPerps is an ongoing process. Features, fee structures, governance models, and technical architectures may be modified by the developers or through community governance to improve security, efficiency, or compliance. Users should not rely on the permanence of any specific feature outlined in previous documentation.

2. Smart Contract & Software Risk

PlasmaPerps runs on smart contracts deployed on the Plasma Chain (and potentially other networks). While we strive for security through third-party audits and rigorous testing:

• Code Vulnerabilities: Smart contracts may contain bugs, exploits, or logic errors that could result in the partial or total loss of funds.

• Composability Risk: Interactions with external protocols (e.g., yield vaults, bridged assets) introduce additional layers of risk that are outside PlasmaPerps' direct control.

• No Reversibility: Transactions on the blockchain are immutable. In the event of a hack or user error, there is no central authority capable of reversing the transaction.

3. Centralization & Sequencer Risk

PlasmaPerps utilizes a hybrid architecture with an off-chain sequencer for high-performance matching.

• Sequencer Downtime: If the off-chain sequencer goes offline or experiences latency, users may be unable to place or cancel orders via the standard UI.

• Censorship Resistance: While the sequencer cannot steal funds, it theoretically has the ability to delay or censor transaction inclusion.

• Force Withdrawal: In the event of a prolonged sequencer failure, users must rely on the "Escape Hatch" (Section 4.4) to withdraw funds directly via smart contracts. This process is technical, slower than standard withdrawals, and requires interaction with the underlying blockchain.

4. Liquidity & Trading Risk

• Liquidation Risk: Perpetual futures trading is highly leveraged. If the market moves against your position, your collateral may be liquidated automatically by the protocol’s deterministic risk engine. You may lose your entire deposit.

• Slippage & Market Depth: While PlasmaPerps incentivizes liquidity via Vaults, there is no guarantee of sufficient liquidity at all times. Users may experience slippage (execution at a worse price than expected) during periods of high volatility.

• Bad Debt: In extreme market scenarios, the Insurance Vault may be depleted. If the protocol enters a state of insolvency, socialized loss mechanisms may trigger, reducing the value of user holdings to cover system debt.

5. Oracle Risk

PlasmaPerps relies on external oracles to determine asset pricing for margin calculations and liquidations.

• Oracle Failure: If an oracle provides incorrect data, freezes, or is manipulated, it may trigger unwarranted liquidations or prevent the closing of profitable positions.

• Mark Price Divergence: The Mark Price (used for liquidations) may diverge from the Index Price due to market conditions, leading to PnL fluctuations.

6. Regulatory Uncertainty

The regulatory status of decentralized derivatives trading is evolving rapidly globally. PlasmaPerps may be subject to future regulations that could impact the protocol’s ability to operate, restrict access to users in certain jurisdictions (e.g., geo-blocking), or require changes to the non-custodial model.

7. User Responsibility

PlasmaPerps is a non-custodial protocol. You are solely responsible for the security of your private keys and wallet. Losing access to your wallet results in the permanent loss of your funds. The protocol developers cannot recover lost keys or reverse authorized transactions.

By accessing and using PlasmaPerps, you acknowledge that you have read this disclosure, understand the risks involved in decentralized perpetual trading, and accept that you are using the protocol at your own risk.

8. Leverage Risk

• Amplified Losses: Leverage multiplies potential gains but equally amplifies potential losses. With up to 100x leverage, a small market move against your position can result in a total loss of your collateral.

• Liquidation: You can lose more than your initial collateral, and market volatility can trigger rapid liquidations.

9.DeFi Protocol Risks

• Smart Contract Risk: While our contracts are non-custodial and audited, vulnerabilities can exist in any complex DeFi protocol.

• Market Risk: The price of all assets, especially cryptocurrencies, can be highly volatile. Market conditions can change rapidly and unexpectedly.

10. Responsible Trading

PlasmaPerps is a platform for experienced traders. We strongly advise all users to adhere to the following principles:

• DYOR (Do Your Own Research): Fully understand the mechanics of perpetual futures, funding rates, and leverage before trading.

• Risk Management: Never trade with money you cannot afford to lose. Start with small positions to learn the platform.

• Not Suitable for All: Leveraged trading is not suitable for all investors.