RISKS

//01_ READ THIS FIRST

Paperhands is leveraged trading against a house that starts with nothing, settled by a contract nobody can change. Each of those facts carries a risk. This page lists them in plain words. It is not exhaustive, and nothing here is a promise that the system will behave as described if something outside it fails.

//02_ LEVERAGE AND HARD BUSTS

• A 100x position is liquidated by a 0.95% move against it, a 50x position by 1.95%, a 10x position by 9.95%.
• A liquidation takes the whole margin. There is no partial liquidation, no margin call and no way to add margin to save a position.
• Any signed price from the last 60 s that crossed your bust price is enough to liquidate you, even if the price has come back since.
• Asking to close does not protect you: a close that fills at or beyond the bust price settles as a liquidation.

//03_ A WIN MAY WAIT

The house is funded only by losses and donations. At launch it holds nothing, so the first winners are queued in full. A queued win is paid when later losses arrive, in strict order, with no interest and no date. If losses stop, payments stop. The house can stay in queue for a long time, and a large win can sit behind others for as long as it takes. Your margin always comes back at once; only the profit waits.

//04_ THE ORACLE AND THE SIGNER SET

• Prices come from five RedStone signers, of which three are enough to make a valid proof. If three of them signed false prices, through compromise or error, the contract would accept them.
• The Chainlink reference band limits this to 2.5% from the reference while the reference is fresh. When the reference has not updated for more than 90,000 s, the check is skipped and the band no longer protects you.
• The owner can replace the signer set (with a threshold of at least 3), widen the band up to 20%, lengthen the reference age up to 7 days and change the reference feed. A compromised owner key could weaken every one of these protections.
• A request executed more than 30 s after its fill time can be executed with any three or more of the five packages, which lets whoever executes it choose among the medians of different subsets.

//05_ KEEPER LIVENESS

The keeper is a single service run by the protocol. If it stops, nothing is lost, but things slow down or stop:

• Requests are not filled until someone executes them. Anyone can, with the historical package for the fill time; requests nobody executes can be cancelled after 3,600 s.
• Positions past their bust price are not liquidated until someone does it.
• Equity markets are not opened in the morning, so equity positions cannot be closed. If the keeper fails while a session is open, the contract's own clock still closes it at 16:00 and keeps it closed at night and on weekends, but nothing would close it on an exchange holiday or at a 13:00 early close.
• Excess sweeps and treasury withdrawals wait until someone calls them.

//06_ EQUITY GAPS

Equity positions stay open over nights, weekends and holidays, and you cannot close them until the next session. A stock can open far from where it closed. If it opens beyond your bust price, you are liquidated at the first price the oracle publishes. Your loss is still limited to the position's margin.

//07_ SMART CONTRACT RISK

All funds sit in one contract, and any contract can contain bugs, this one included. The contract is not upgradeable and has no function that lets anyone move user balances, the house's cash, claims or rewards. That protects you from the operators, and it also means that a bug cannot be patched and funds cannot be rescued. Read the contract, or have someone you trust read it, before depositing an amount that matters to you.

//08_ THE COLLATERAL AND THE CHAIN

• Every balance is in USDG. Its value depends on its issuer, Paxos, keeping it redeemable at $1. The issuer controls the token contract; if it froze the exchange's address or the token lost its peg, every balance would be affected.
• If chain 4663 stops producing blocks, or its RPC endpoints fail, nothing can be requested, filled or withdrawn until it recovers, while prices keep moving.

//09_ THE ONE-CLICK TRADING KEY

The session key lives in this browser's storage. Anything that can read it, a malicious extension for example, can open and close positions with your available balance until the key expires or you revoke it. It cannot withdraw. See one-click trading.

//10_ PAPER

Paper is not money and not a claim on the house's cash. It cannot be sold or transferred. Its rewards depend entirely on future fees and future surplus, which may be small or nothing.

//11_ ADMIN AND OPERATIONS

The owner can pause new opens, retire a market at a price of its choosing among the signed prices of the last 60 s, change limits, fees and impact parameters for new positions, and change the treasury and the keeper. The owner cannot take a balance. But an owner that set a reference feed that cannot be read, or a signer set that publishes nothing, would stop that market from filling and liquidating: available balances could still be withdrawn, while margin in open positions would stay locked until settlement resumed. These powers are listed in full in admin powers.

//12_ LAW AND ELIGIBILITY

Leveraged synthetic products are restricted or prohibited in many places. Paperhands is not available to persons in the United States. You are responsible for knowing whether you may use it where you live. Nothing in these docs is investment, legal or tax advice. See the terms.