Risk Disclosure

1. This is a testnet

Morfi is currently deployed on Solana's devnet cluster. Devnet is a public testnet intended for development and experimentation. The Service uses devnet USDC, a valueless test token distributed through an in-app faucet that we control. Nothing on the Service involves real money or regulated financial instruments.

The risks described below apply specifically to the devnet preview. When Morfi launches on Solana mainnet, a separate risk disclosure will be published reflecting the risks of real-money trading, which will differ materially.

2. Smart-contract risk

The Service relies on Solana programs deployed by us to devnet. These programs are under active development and have not been audited by an independent third-party security firm. Internal reviews using AI-assisted methodology have been conducted, but no third-party auditor has signed off on the code. The programs may contain bugs, design flaws, or vulnerabilities that result in unexpected behaviour, loss of devnet tokens, or contract failure. Markets, balances, and positions may be affected without notice.

3. Resolution and consensus risk

Markets resolve based on conviction — a blend of reserve dominance (from the bonding curve) and time-weighted conviction decay. When one outcome's conviction reaches the resolution threshold, the next trade atomically resolves the market to that winner; that trade triggers resolution and is not itself executed. There is no oracle, no real-world data feed, and no person who declares a winner. Resolution is determined entirely by trading activity on the bonding curve, and any user can submit the transaction that triggers resolution once the on-chain criteria are met. As a result:

• Manipulation risk. A well-capitalised participant or coordinated group could accumulate dominance on one outcome to trigger conviction-based resolution, potentially forcing a resolution to an outcome before the market naturally settles. Once resolution occurs, it is final and cannot be challenged on-chain.
• Resolution may not match reality. Because no oracle is consulted, a market can resolve to an outcome that is, factually, wrong.

4. Trading-mechanics risk

Each outcome trades on its own independent bonding curve while the market is live; after resolution, the winning outcome graduates to its own AMM following a configurable delay. Outcome prices do not sum to one dollar. Returns on a winning outcome are not capped at the total amount collected by the market. Conversely, holding multiple outcomes does not guarantee a payout, because losing outcomes have no remaining USDC backing after resolution.

Trading fees are dynamic and vary with the lifecycle stage of a market and the dominance of an outcome, and are capped at a configurable maximum per fee type.

5. Loser tokens have no remaining USDC backing

When a market resolves, only holders of the winning outcome are entitled to a share of the prize pool. Losing outcome tokens are burned at resolution — their on-chain supply is destroyed — so they have no remaining USDC backing, represent no claim on the protocol's reserves, and cannot be traded after the market resolves. Holders of a losing outcome recover nothing.

6. The claim deadline

Payouts to holders of winning outcomes are distributed via a burn-to-claim mechanism: after resolution, you burn your winning claim-rights tokens to receive your pro-rata share of the prize pool in USDC.

If you do not claim within the configured clawback delay (measured from the market's graduation), the unclaimed funds may be swept and you will permanently forfeit the right to claim them. This deadline is enforced on-chain by the contract's sweep instruction and cannot be waived by us once the configured clawback delay has elapsed.

7. Boost risk

If you boost a market, your devnet USDC is donated irreversibly into the market's prize pool during the trading period. You cannot withdraw the boost, and the funds become part of the pool that will be distributed to winners.

8. Wallet, custody, and key-loss risk

When you sign up, our authentication provider Turnkey provisions an embedded Solana wallet on your behalf. Turnkey custodies the private keys for that wallet. Your access to the wallet depends on your access to your email or OAuth provider through Turnkey. If you lose access to those, or if Turnkey experiences an outage or security incident, you may lose access to the wallet and any devnet tokens it holds. We cannot recover your wallet on your behalf.

External wallets you connect (such as Phantom, Solflare, or Backpack) are self-custodial and managed entirely by you. Loss of an external wallet's seed phrase or private key is permanent.

9. Devnet state may be reset

Devnet on-chain state may be reset, redeployed, or wiped at any time, including by us when we redeploy the contracts. Markets, balances, claim records, historical activity, and any user-generated data may be deleted permanently and without notice. You should not rely on the persistence of any data on the Service.

10. Administrative-control risk

We retain administrative controls over the Service and the underlying contracts. We can, at our discretion: change protocol parameters such as fees, conviction thresholds, and the delay before unclaimed prizes are swept; sweep unclaimed prize pools after the configured clawback delay; and upgrade the programs on devnet. Exercising any of these controls can affect open positions, pending claims, or expected payouts.

11. Network and infrastructure risk

Solana devnet is a shared, public testnet that experiences periodic outages, congestion, forks, and degraded performance. Hosting providers, RPC providers, indexers, our authentication provider, and other infrastructure used by the Service may also experience downtime. The Service may be partially or fully unavailable as a result, and on-chain transactions may fail or be delayed.

12. Privacy and data-exposure risk

Activity on the Service is recorded on the public Solana blockchain and is, by design, visible to anyone. Wallet addresses, trades, balances, claims, gifts, market proposals, and resolution outcomes are publicly observable. Public Morfi features such as profiles, portfolios, leaderboards, theses, and gift permalinks may further associate this activity with your handle, display name, and avatar. Devnet activity may, over time, be linked to your real-world identity. Do not perform devnet activity that you would not want to be public.

13. Mainnet behaviour may differ

The devnet preview is a testing environment. Features, fees, mechanics, parameters, and economics on devnet are not guaranteed to match the mainnet release. Performance, liquidity, and resolution behaviour observed on devnet are not predictive of mainnet behaviour. You should not draw conclusions about real-money trading from devnet activity.

14. No investment, financial, or legal advice

Nothing on the Service is investment, financial, tax, or legal advice. The Service does not recommend that you take any particular action. You are solely responsible for any decisions you make based on information from the Service, and you should consult your own advisors as appropriate.

15. Regulatory uncertainty

The legal and regulatory treatment of opinion markets, blockchain applications, and token-based activity is evolving and varies by jurisdiction. The Service may become unavailable in certain jurisdictions, or its features may change, in response to legal or regulatory developments. You are responsible for ensuring that your use of the Service complies with the laws that apply to you.

16. Acknowledgement

By using the Service, you acknowledge that you have read, understood, and accepted the risks described above, and that you are using the Service voluntarily and at your own risk.