You hereby acknowledge that you have carefully assessed your financial situation and risk tolerance, and as a consequence, you have conducted any additional research, or asked advice, as you may have deemed necessary after reading the foregoing Disclaimer. You agree to assume responsibility for any of the risks listed in this Section 4 and any other risks, assumptions and decisions involved in using Staking Protocols and Cryptocurrency. You warrant and accept that you understand these risks.
Market risk of digital assets. Market risk is a very pronounced risk factor in digital assets. You hereby agree that you understand, assume, acknowledge and accept your exposure to all of the below listed Market risks of digital assets, including Applicable Digital Assets:
High volatility. The market value of digital assets is often volatile. Some of the reasons for the volatility are the small market capitalisation compared to traditional capital markets, the risk of sudden regulatory changes, trend-cycles or the performance of the market for traditional investments.
Emerging market. The market for digital assets, including markets for DeFi and Staking, is still in an emerging and maturing phase. Investment in these markets are often deemed riskier than in long standing and more mature markets. The market for certain Applicable Digital Assets may be yet to exist. Hence you may find it difficult or impossible to liquidate or redeem your Applicable Digital Assets.
Regulatory risks. The legal framework surrounding digital assets is still uncertain in many countries and so far, digital assets have seen to be regulated differently across countries. This non-uniform treatment and new, potential legal measures exposes Applicable Digital Assets and our Users to the risks of non-compliance with law, risks of change in the methodology of Applicable Digital Assets and transactions with such assets being classified differently leading to delisting of an Applicable Digital asset by an exchange, DeFi or Staking, and restricted trade- and transferability which ultimately affect the value of the Applicable Digital Assets and can lead to penalties or fines.
Enforceability of Smart contracts. A smart contract is an interactive blockchain-native agreement based on code (the "Smart contract"). The interaction of Users with the Services is mostly performed via Smart contracts.
Market abuse. As outlined above, the market for digital assets is still emerging and subject to a varying or non-existing regulation. As such, not all market participants, including the Issue offer the safeguards of traditional markets to prevent market abuse (i.e. fraud, market manipulation or insider trading). Such market abuse may lead to depreciation of the market value of Applicable Digital Assets and cryptocurrencies resulting in partial or total loss of your cryptocurrency funds and Applicable Digital Assets.
Market risk is constant. Digital asset exchanges, whether centralised or decentralised, are often open around the clock seven days a week. This means that the digital assets, including Applicable Digital Assets, are subject to a constant market risk as trading never halts.
Credit and Liquidity risks. Credit and Liquidity risks are often connected to difficulties with the determination of, and assigning the liabilities to the Issuer of an Applicable Digital asset (the "Issuer"), including for purposes of an Applicable Digital asset redemption, either by redeeming it directly for cash with the Issuer or by selling it to a Third-Party, and including with the determination of, and assigning the liabilities to the Issuer by Staking Accounts, hence making it illiquid and lack of legal supervision of the Issuers. You hereby agree that you understand, assume, acknowledge and accept your exposure to all of the above mentioned Credit and Liquidity risks.
Counterparty risk. Your Staking Account is not a checking or savings account, and it is not covered by insurance against losses. We will pledge, repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use the digital assets in your Staking Account to counterparties, and such digital assets will be exposed to various risks as a result of such transactions. In certain jurisdictions, digital assets are not legal tender, and are not backed by the government or any regulatory authority. Your Staking Account is not registered with any federal or state securities regulatory authority. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of digital assets. You acknowledge that by utilizing the Staking Account service, your digital assets are not custodied by Margex and may be subject to total loss if an event occurs at the protocol level, which is outside of Margex’ control. You understand and agree that notwithstanding Margex will not be responsible for any such loss (whether total or otherwise) of your digital assets and will not replace them or otherwise compensate you. You hereby agree that you understand, assume, acknowledge and accept your exposure to all of the above mentioned Counterparty risks.
Technical risks. The technological design of the Networks, Applicable Digital Assets, DeFi and Staking comes with a variety of different risks, including, without limitation those listed below. You hereby agree that you understand, assume, acknowledge and accept your exposure to all of the below listed Technical risks:
Hardfork. A Hardfork describes an event which splits a new blockchain from the original one by modifying the source code. Usually a modification or update of the source code is accepted by all participants. Where there is a disagreement between such participants of a single network, the network infrastructure can be divided into two groups using two different blockchains. Particularly, in case of Hardfork of any of the Networks, Applicable Digital Assets registered on the Network may be both credited on both the original Network and new network. In the event of a Hardfork, there may be significant price fluctuations resulting in a temporary suspension of Trading of Cryptocurrencies by Staking Accounts and loss of access to digital assets, including Applicable Digital Assets.
Storage of digital assets. Access to the blockchain networks is generally maintained through a public and a private key to an address (the "Keys"). Access to the blockchain network and therefore to the digital asset is impossible if the Keys are lost. Theft, loss, or destruction of the Keys, as well as hacking of underlying software and technology infrastructure, or other reasons for the private keys stored by Margex to become not recognisable any more can result in you not being able to access and/or use the Applicable Digital Assets on your Personal address.
Transactional risk. Transactions on any of the Networks available on the Platform are sent to an address determined by the public key and Network choice. If a wrong public key and/or Network is used, it will be impossible to identify the recipient and to reverse the transaction made to an address with a wrong public key or using wrong Network leading to the total loss of control over transacted cryptocurrency and/or Applicable Digital Assets used in such transaction. There may also be delays in the execution of transactions as the transfer of Applicable Digital Assets may become subject to verification, legal suits, actions and proceedings, as well as other processes involving Third-Parties.
Open source software. Digital Assets are based on open-source software (i.e. Networks) that is freely accessible and may be copied, used or modified at any time. There is thus an increased risk of bugs and vulnerabilities, and also deliberately embedded malfunctions. The discontinuation of such open-source software is always possible and might expose digital assets, including Applicable Digital Assets, to vulnerabilities, programming errors and threats from fraud, theft and attacks, as well as lead to inaccessibility of Personal Addresses and digital assets, including Applicable Digital Assets stored on such Personal Addresses.
Bugs in smart contracts. Smart contracts, including without limitation those created by Margex and those created by our licensors and service providers can be faulty, vulnerable and/or bugged. For example, in a Swap feature, funds can be exchanged without the need of a middleman/intermediary other than the autonomous smart contract. However, since the smart contract relies solely on the underlying code, the interaction with the smart contract cannot be ensured to be bug-free until we, our licensors or service providers have them audited by a Third-Party professional technical audit company. For the User, this means that the Counterparty risk is the risk of the underlying code of the smart contract which can be difficult to assess. Furthermore, transactions to the smart contract cannot be reversed or rectified even if proven to be faulty.
Hacking. A decentralised consensus is necessary to validate transactions and the validation requires computing capacity. Therefore, it is possible for a participant with significant computing capacity to effectively centralise the consensus and hence manipulate it. For example, making it possible to verify or process a false transaction for its own benefit at the loss of others. The risk of such a majority attack decreases with the increased computing capacity dedicated to validating. Due to the mathematical foundation of the crypto technology, there are also various other forms of attacks, like collision attacks, dusting attacks, Sybil attacks, denial-of-service attacks and distributed denial-of-service attacks, or censorship attacks.