BASISPOINT RISK DISCLOSURE

1. Important notice

BasisPoint provides market data, research, analytics, software tools and illustrative strategy information for informational and educational purposes only.

Nothing made available through BasisPoint constitutes:

• investment advice;
• financial advice;
• trading advice;
• legal, tax or accounting advice;
• a personal recommendation;
• an assessment of suitability or appropriateness;
• an offer or solicitation to buy, sell or hold any asset;
• a recommendation to enter into any transaction; or
• a guarantee of any result.

You are solely responsible for evaluating the risks of any investment, trading strategy, exchange, protocol or transaction.

You should conduct your own research and obtain independent professional advice before making any financial or trading decision.

2. Risk of loss

Digital assets, derivatives, leveraged products and decentralised-finance strategies involve substantial risk.

You may lose some or all of the capital committed to a transaction.

Losses may occur quickly and may exceed the amount initially expected, particularly where leverage, borrowing, derivatives or liquidation mechanisms are involved.

You should not commit capital that you cannot afford to lose.

3. Market volatility

Digital-asset markets may experience extreme and sudden price movements.

Prices may be affected by factors including:

• market sentiment;
• liquidity;
• macroeconomic developments;
• regulatory announcements;
• exchange listings or delistings;
• token unlocks and emissions;
• protocol changes;
• cyber incidents;
• concentrated ownership;
• market manipulation;
• news and social-media activity; and
• events that cannot be predicted.

Historical volatility may not reflect future volatility.

Periods of apparently stable market behaviour can be followed by abrupt and severe price movements.

4. Leverage and liquidation risk

Leverage can magnify both gains and losses.

A relatively small adverse market movement may:

• result in substantial losses;
• trigger margin calls;
• cause automatic position reduction;
• result in partial or complete liquidation; or
• create losses greater than the collateral allocated to a position.

Liquidation prices displayed by an exchange or calculated by BasisPoint may be estimates only.

Actual liquidation may depend on:

• maintenance-margin rules;
• portfolio-margin calculations;
• mark prices;
• index prices;
• fees;
• funding payments;
• collateral values;
• exchange-specific risk limits; and
• changes to platform rules.

You must independently monitor your collateral, leverage, margin requirements and liquidation risk.

5. Perpetual-contract and funding-rate risk

Perpetual contracts generally use funding payments to help align contract prices with underlying spot prices.

Funding rates may:

• change rapidly;
• reverse direction;
• differ across venues;
• be calculated using different methodologies;
• be capped or adjusted;
• be applied at different intervals; or
• differ from values displayed before settlement.

A strategy that appears profitable based on a current or historical funding rate may become unprofitable before or after a position is opened.

Annualised funding figures are hypothetical extrapolations. They may assume that a short-term rate continues for an entire year, even though the rate may change immediately.

Funding income may be offset or exceeded by:

• adverse price movements;
• basis changes;
• trading fees;
• borrowing costs;
• slippage;
• market impact;
• collateral requirements;
• transfer costs;
• taxation; and
• liquidation losses.

6. Basis and hedge risk

A basis, carry, arbitrage or delta-neutral strategy may involve holding offsetting positions across different instruments or venues.

These positions may not move together as expected.

Risks include:

• divergence between spot and derivative prices;
• imperfect hedge ratios;
• different contract specifications;
• different settlement currencies;
• mark-price differences;
• timing mismatches;
• collateral mismatches;
• correlation breakdown;
• funding-rate changes;
• failed or delayed execution;
• inability to close both legs simultaneously; and
• one venue remaining open while another is unavailable.

A strategy described as “hedged”, “market-neutral”, “delta-neutral” or “arbitrage” is not risk-free.

7. Execution risk

Displayed prices, spreads and opportunities may not be available when you attempt to trade.

Actual execution may be affected by:

• latency;
• rapid market movement;
• thin order books;
• insufficient liquidity;
• slippage;
• partial fills;
• rejected orders;
• minimum order sizes;
• price increments;
• order-book manipulation;
• exchange outages;
• rate limits;
• network delays; and
• differences between indicative and executable prices.

A multi-leg strategy creates additional execution risk because one leg may execute while another does not.

This can leave you with an unintended directional or leveraged exposure.

8. Liquidity risk

Liquidity may deteriorate rapidly.

An asset or market that appears liquid under normal conditions may become difficult or impossible to trade during periods of stress.

Low liquidity can result in:

• wide bid-offer spreads;
• substantial slippage;
• partial fills;
• inability to close a position;
• large market impact;
• unreliable price discovery; and
• increased liquidation risk.

Reported trading volume, open interest or market depth may be inaccurate, manipulated or not directly comparable across venues.

9. Exchange and counterparty risk

Using a centralised exchange exposes you to risks associated with that exchange and its counterparties.

These risks may include:

• insolvency;
• fraud;
• mismanagement;
• hacking;
• custody failures;
• account freezes;
• withdrawal restrictions;
• delayed settlements;
• operational outages;
• forced position closures;
• changes to trading rules;
• clawbacks;
• socialised losses;
• regulatory intervention; and
• loss of access to assets.

Assets held at an exchange may not have the same legal protections as assets held in a regulated bank or securities account.

BasisPoint does not control third-party exchanges and does not guarantee their solvency, security, conduct or performance.

10. Custody and wallet risk

Holding digital assets involves custody risks.

These may include:

• loss of private keys;
• theft of credentials;
• phishing;
• malware;
• device compromise;
• incorrect wallet addresses;
• unauthorised transactions;
• smart-contract approvals;
• compromised browser extensions; and
• loss of access to recovery information.

Blockchain transactions are generally irreversible.

Funds sent to an incorrect address, unsupported network or incompatible contract may be permanently lost.

You should never provide a private key or seed phrase to BasisPoint or through any BasisPoint support channel.

11. Smart-contract and protocol risk

Decentralised applications and protocols rely on smart contracts and other software.

They may contain:

• coding errors;
• economic design flaws;
• access-control weaknesses;
• governance vulnerabilities;
• oracle dependencies;
• upgrade risks;
• malicious administrator functions;
• undocumented features; or
• vulnerabilities that have not yet been identified.

Audits, code reviews and bug-bounty programmes do not eliminate smart-contract risk.

A protocol may be exploited, paused, upgraded, abandoned or altered without notice.

12. Oracle and pricing risk

Many digital-asset products rely on third-party price feeds, indices or oracles.

An oracle may:

• report an incorrect price;
• update slowly;
• become unavailable;
• be manipulated;
• use limited market sources;
• diverge from an executable market price; or
• be affected by network congestion.

Incorrect or delayed oracle data may result in:

• unexpected liquidations;
• incorrect collateral values;
• failed transactions;
• pricing discrepancies; or
• losses that cannot be reversed.

13. Stablecoin risk

Stablecoins may fail to maintain their intended value.

Risks may include:

• insufficient or low-quality reserves;
• issuer insolvency;
• banking-partner failure;
• redemption restrictions;
• regulatory action;
• smart-contract vulnerabilities;
• market illiquidity;
• loss of confidence; and
• permanent or temporary depegging.

A stablecoin should not be assumed to be equivalent to cash or a bank deposit.

14. Bridge and cross-chain risk

Cross-chain bridges and wrapped assets involve additional risks.

These may include:

• smart-contract exploits;
• validator compromise;
• multisignature failure;
• incorrect minting;
• insolvency of the bridge operator;
• delayed transfers;
• unsupported assets;
• chain reorganisations;
• loss of backing; and
• permanent loss of funds.

A wrapped or bridged asset may trade at a discount to the underlying asset and may become difficult to redeem.

15. Blockchain and network risk

Blockchain networks may experience:

• congestion;
• high transaction fees;
• delayed confirmation;
• failed transactions;
• chain reorganisations;
• forks;
• validator failures;
• governance disputes;
• software bugs;
• denial-of-service attacks; and
• permanent or temporary outages.

A transaction may remain pending, fail or execute later than expected.

Network fees may increase materially during periods of market stress.

16. Token and issuer risk

Digital assets may have limited legal, economic or governance rights.

Risks may include:

• concentrated ownership;
• insider selling;
• token unlocks;
• inflationary emissions;
• governance manipulation;
• lack of transparency;
• changes to token economics;
• abandonment by developers;
• misleading disclosures;
• insufficient reserves;
• limited utility;
• delisting;
• migration to a new contract; and
• classification as a regulated product.

A token’s market price may not reflect its fundamental value, utility or likelihood of long-term survival.

17. Regulatory, legal and tax risk

The legal and regulatory treatment of digital assets, exchanges, protocols, derivatives and related services varies between jurisdictions and may change rapidly.

Changes may result in:

• restrictions on access;
• mandatory account closure;
• delisting;
• asset freezes;
• restrictions on withdrawals;
• tax liabilities;
• reporting obligations;
• changes to product availability;
• enforcement action; or
• a transaction becoming unlawful.

You are responsible for determining whether your activities are lawful and for complying with all applicable tax, reporting and regulatory obligations.

BasisPoint does not provide legal or tax advice.

18. Data risk

BasisPoint relies on data from exchanges, blockchains, protocols, vendors, public sources and third-party APIs.

Data may be:

• inaccurate;
• incomplete;
• delayed;
• duplicated;
• mislabelled;
• unavailable;
• manipulated;
• subject to revision;
• calculated using inconsistent methodologies; or
• affected by technical failures.

A timestamp may indicate when information was received or processed rather than when the underlying market event occurred.

BasisPoint does not guarantee that information is:

• real-time;
• complete;
• accurate;
• executable;
• current; or
• suitable for a particular purpose.

You should verify material information directly with the relevant primary source before acting.

19. Calculation and methodology risk

BasisPoint may calculate or display:

• annualised funding rates;
• yields;
• spreads;
• basis;
• volatility;
• liquidity measures;
• risk scores;
• slippage estimates;
• liquidation estimates;
• forecasts;
• rankings; and
• other derived metrics.

These calculations depend on assumptions and methodologies.

Different methodologies may produce materially different results.

Calculated outputs may exclude or imperfectly estimate:

• trading fees;
• withdrawal fees;
• deposit fees;
• borrowing costs;
• gas fees;
• spreads;
• slippage;
• market impact;
• latency;
• taxes;
• collateral costs;
• hedging costs;
• failed transactions;
• funding timing; and
• the cost of transferring assets between venues.

A score, ranking or estimate is a simplified analytical output and must not be treated as a statement of fact.

20. Backtesting and hypothetical-performance risk

Backtests, simulations, modelled outcomes and hypothetical results have significant limitations.

They may:

• use hindsight;
• rely on incomplete or cleaned data;
• overfit historical conditions;
• assume unavailable execution prices;
• omit fees and slippage;
• ignore market impact;
• assume sufficient liquidity;
• exclude failed transactions;
• ignore exchange outages;
• omit operational constraints; and
• fail to reflect changing market regimes.

Hypothetical results do not represent actual trading.

Past performance, historical data and backtested outcomes are not reliable indicators of future performance.

There is no guarantee that a strategy will achieve results similar to a backtest or simulation.

21. Artificial-intelligence and model risk

BasisPoint may use artificial intelligence, machine learning, statistical models and automated systems.

Outputs from these systems may:

• contain factual errors;
• misinterpret data;
• rely on outdated information;
• omit material risks;
• generate incorrect calculations;
• make unsupported assumptions;
• misclassify assets or events;
• produce inconsistent results; or
• communicate unjustified confidence.

Models may perform poorly when market conditions differ from the data used to design or test them.

You must independently review and validate any material automated output.

No artificial-intelligence, model or automated output should be used as the sole basis for a financial or trading decision.

22. Alert and notification risk

Alerts and notifications may be:

• delayed;
• duplicated;
• incomplete;
• incorrectly triggered;
• delivered after the information has become stale;
• blocked by a third-party provider; or
• not delivered at all.

You must not rely on BasisPoint alerts as your sole risk-management, liquidation-monitoring or position-monitoring system.

You remain responsible for directly monitoring your accounts, collateral, positions and transactions.

23. API and integration risk

Connections to exchanges, wallets, protocols and other third-party services may fail or behave unexpectedly.

Risks include:

• expired credentials;
• incorrect permissions;
• API outages;
• delayed data;
• rate limits;
• changed endpoints;
• incorrect account mapping;
• failed synchronisation;
• unauthorised access; and
• differences between the Platform and the connected service.

You are responsible for reviewing and limiting permissions granted to any connected service.

Read-only credentials should be used wherever trading, withdrawal or transfer permissions are unnecessary.

24. Cybersecurity and operational risk

BasisPoint and the third-party systems on which it relies may be affected by:

• cyberattacks;
• malware;
• unauthorised access;
• software defects;
• infrastructure failure;
• cloud-service outages;
• telecommunications failure;
• data loss;
• denial-of-service attacks; and
• human error.

No technical system is completely secure or continuously available.

Platform outages or errors may occur during periods of significant market volatility.

25. Third-party risk

BasisPoint may display information from or link to exchanges, protocols, wallets, custodians, data providers and other third parties.

A listing, link, score or integration does not constitute an endorsement.

BasisPoint does not control and is not responsible for a third party’s:

• solvency;
• security;
• conduct;
• accuracy;
• legal compliance;
• availability;
• fees;
• privacy practices; or
• performance.

You should independently assess every third party before using its products or services.

26. Concentration and correlation risk

A portfolio or strategy may appear diversified while remaining exposed to common underlying risks.

Digital assets may become highly correlated during periods of market stress.

Positions across different:

• tokens;
• exchanges;
• protocols;
• blockchains;
• stablecoins; or
• counterparties

may be affected by the same market, liquidity, regulatory or operational event.

Diversification does not guarantee protection against loss.

27. Operational and human-error risk

Losses may result from:

• entering an incorrect order;
• selecting the wrong asset or market;
• using the wrong contract address;
• selecting the wrong network;
• entering an incorrect position size;
• applying excessive leverage;
• failing to monitor a position;
• misunderstanding a strategy;
• failing to account for fees;
• failing to rebalance a hedge; or
• misconfiguring an automated workflow.

You are responsible for checking all transaction parameters and strategy settings.

28. Automated-execution risk

Where automated or transaction-related functionality is available, software may submit, route or manage transactions based on configured rules.

Risks may include:

• incorrect configuration;
• software bugs;
• duplicate orders;
• stale data;
• delayed cancellation;
• excessive trading;
• failure to stop;
• incorrect position sizing;
• unintended leverage;
• partial execution;
• failure of one leg of a strategy; and
• actions occurring faster than a user can intervene.

Automated strategies require active monitoring and appropriate risk limits.

No automated system should be assumed to operate correctly under all market conditions.

29. No guarantee of profitability

BasisPoint does not guarantee that:

• any displayed opportunity can be executed;
• any strategy will be profitable;
• any risk score will predict losses;
• any hedge will remain effective;
• any funding rate will continue;
• any yield will be achieved;
• any backtest will be replicated;
• any alert will be timely;
• any market will remain liquid; or
• any loss will be limited.

All trading and investment decisions remain your responsibility.

30. Acknowledgement

By using BasisPoint, you acknowledge that:

• you have read and understood this Risk Disclosure;
• digital-asset markets involve substantial and unpredictable risk;
• BasisPoint provides information and analytical tools rather than personal advice;
• information and outputs may be inaccurate, incomplete or delayed;
• you are responsible for independently verifying information;
• you are responsible for assessing whether any activity is appropriate and lawful;
• you are responsible for implementing your own security and risk-management controls; and
• you may lose some or all of the capital used in a transaction.

This Risk Disclosure should be read together with the BasisPoint Terms of Use and Privacy Policy.