Risk Disclosure

1. Leverage and Liquidation

Parchment lets you open leveraged long and short positions. Leverage multiplies gains and losses: a small price move against you can lose your whole margin quickly. Only trade what you can afford to lose.

A position becomes liquidatable once the oracle price reaches its bust price. From then on you cannot close it yourself, and you lose the margin locked in it. Prices can move past your bust price between oracle updates, during a market close or while a market is halted, and positions may be liquidated without any warning to you.

2. Smart Contract Risk

Parchment runs on Sui smart contracts. A bug in the contracts, in the libraries they use, or in the Sui network itself could cause partial or total loss of funds. The contracts can be upgraded by the protocol's administrator, and an upgrade can change how they behave. Audits, where performed, do not guarantee that contracts are free of errors.

3. Oracle Risk

Prices come from a third-party oracle (Pyth Lazer). Fills, liquidations and settlements all use the oracle price. A wrong, stale or delayed price can fill your order at a bad price or liquidate your position. Stale prices are refused, so orders may not fill while fresh prices are unavailable.

If a market's price feed is switched off (an oracle kill switch), closes, emergency closes and liquidations stop on that market until it is switched back on. While it is off, a position can move past its bust price without being liquidated. Session closes keep running while the feed is off.

4. House Pool and Payout Queue

The house pool is the counterparty to every position, and profits are paid from it. The pool is not required to hold enough to pay every winner at once. When it is short, profits wait in the payout queue until trading losses refill the pool. There is no way to exit the queue early and no guaranteed date by which a queued payout will be made.

5. Market Hours and Session Closes

Some markets follow the hours of an underlying market. Open positions can be force-closed at a snapshot price when their market closes: US stock markets at the end of the US stock market session. A position past its bust price at the snapshot is liquidated instead. Session closes run during pauses and while the market's price feed is switched off.

A market may also be close-only, accepting no new positions, for example until scheduled-session protection is live.

Around scheduled events, such as earnings reports, new opens can be paused, leverage capped, and stock market positions closed for you.

6. Pauses

The protocol's administrator can pause opens on a market or across the protocol. A pause does not stop closes, emergency closes or liquidations. An emergency pause by the administrator or guardian can halt claims, and a full pause also stops payout queue harvests until it is lifted.

7. Keepers and Off-Chain Services

Orders are filled by the protocol's keeper. If it is down or delayed, unfilled opens expire and are refunded, and you can emergency close a position after a short delay once a fresh oracle price has been published.

Stop-loss and take-profit triggers rely on a separate trigger service. They are best effort and can fill worse than your trigger price, or not at all. Gas sponsorship and one-click trading depend on further services that can be limited, unavailable or ended at any time; when they are, you may need to sign and pay gas from your wallet.

8. PARCHMENT Token

PARCHMENT has no guaranteed value and cannot be redeemed for USDC. Mints can be scaled down by the daily cap, and new mints are locked and vest over time. While a mint is still locked, the protocol's administrator can void it, burning it. Staking rewards depend on protocol fees and are not guaranteed. Game rewards, such as XP, crates, achievements and cosmetics, have no guaranteed value.

9. Stablecoin Risk

Collateral, margin, profits and payouts are in USDC, a stablecoin issued by a third party. USDC may lose its peg to the US dollar, be frozen, or become unavailable or restricted, and Parchment has no control over it.

10. Network, Wallet and Key Risk

Transactions depend on the Sui network, which can be congested, halted or changed by upgrades, and on your wallet software. A transaction can fail, be delayed or land later than you expect.

You alone control your wallet. If you lose your private key or recovery phrase, or someone else obtains it, you can permanently lose access to your funds; nobody, including Parchment, can recover them. A session key for one-click trading is held in your browser and can trade (but not withdraw) on your account until you turn it off (revoke it); one created before November 4, 2026 may instead end on a set date unless it is extended. Keep the account key object your wallet holds for your Parchment account: deposits, withdrawals and wallet-signed trades require it.

11. Regulatory Risk

The regulation of crypto assets and leveraged derivatives is uncertain and changing, and differs between jurisdictions. Trading leveraged derivatives may be restricted or prohibited where you live. New laws or enforcement actions could make the Services or the Parchment protocol unavailable to you, or affect the value of your positions and tokens. You are responsible for complying with the laws that apply to you.

12. Tax

Trading, payouts, PARCHMENT mints, staking rewards and other rewards may have tax consequences. You are responsible for determining and paying any taxes that apply to you. Consider seeking advice from a tax professional.

13. No Investment Advice

Nothing in the Services is investment, financial, legal or tax advice, or a recommendation to buy, sell or hold any asset or to take any position. You make your own decisions and bear their consequences. This disclosure does not describe every risk of using the Services; see also the Terms of Service.