Risk Disclosure for Perpetuals Contracts on Lower Capitalization Tokens

While perpetual futures on tokens with lower capitalization may offer potential for high returns, they inherently carry elevated risks compared to more established assets. These risks include, but are not limited to:

1. Extreme Price Volatility
   Lower capitalization tokens are highly susceptible to severe price fluctuations driven by market sentiment, speculative trading, or limited adoption. Prices may swing dramatically in short periods, potentially eroding investment value rapidly.
2. Liquidity Constraints
   Lower liquidity may result in wider bid-ask spreads, slippage during trades, or difficulty exiting positions without significantly impacting the token’s price.
3. Total Loss of Value
   Smaller projects face higher risks of failure, abandonment, or loss of utility, which could render tokens worthless. This includes risks of protocol flaws, mismanagement, or competition.
4. Delisting Risk
   Exchanges may delist tokens that fail to meet evolving compliance, liquidity, or market stability standards. Delisting could permanently restrict access to trading venues.
5. Governance and Development Risks
   Many lower capitalization projects lack mature governance frameworks or clear roadmaps. Changes in development teams, protocol rules, or tokenomics (e.g., inflationary supply schedules) may materially impact value.
6. Regulatory Uncertainty
   Evolving regulations could disproportionately affect smaller tokens, including restrictions on trading, custody, or classification (e.g., securities designations).
7. Cybersecurity Vulnerabilities
   Smaller projects may have less robust security infrastructure, increasing exposure to hacks, smart contract exploits, or network outages that could irreversibly harm token value.
8. Concentration Risks
   A small group of holders (e.g., >5% ownership) may exert outsized influence over token prices or governance decisions, amplifying volatility.

Disclaimer
HashKey assumes no responsibility for losses incurred through trading lower capitalization tokens. These assets are speculative and unsuitable for risk-averse investors.