Risk Disclosure

This Risk Disclosure describes risks associated with the Kyte protocol, a non-custodial, fully collateralised options market designed for Robinhood Chain. The protocol is not live yet. This disclosure is provided so you can understand the risks before it is. It is not exhaustive. Only use the protocol with funds you can afford to lose entirely.

The protocol runs on smart contracts. Despite testing, planned independent audits and a bug bounty, code can contain errors or vulnerabilities that lead to loss of funds. Audited code can still fail. The contracts are not upgradeable, which removes admin risk but also means a defect cannot be patched in place.

• Buyers can lose the entire premium. Options can and often do expire worthless.
• Call sellers give up any upside above the strike for the life of the option. If the token rises sharply, the seller still receives only the strike.
• Put sellers can be assigned tokens at the strike while the token's market value keeps falling, and may receive tokens worth far less than the WETH they locked.

Markets may be thin. There may be no buyer for an offer, or no taker for an Option NFT you wish to resell. Being able to transfer an NFT does not mean anyone will want to buy it.

Listed tokens may be highly volatile, illiquid, or fail entirely. Some may be memecoins with no fundamental value. A token's listing on Kyte is not an endorsement. Tokens can be disabled for new activity, but existing positions remain subject to the token's behaviour.

Premiums and strikes are set by sellers and accepted by buyers. There is no price oracle and no automated fair-value check. Nothing in the protocol protects you from accepting a bad price. You are responsible for evaluating every offer.

The protocol depends on Robinhood Chain, an Ethereum L2. Outages, congestion, high fees, sequencer issues, chain reorganisations or bridge failures could delay or prevent transactions, including exercise before expiry.

An option can only be exercised before its expiry. If you do not exercise in time, for any reason including network delays, the option lapses and the collateral returns to the seller. There is no automatic exercise.

Strikes, premiums and payouts are denominated in WETH. Wrapping and unwrapping ETH involves additional transactions and depends on the WETH contract on the network.

Certain settings, such as fees, token listings and caps, can be changed through a 48-hour timelock controlled by a 3-of-5 multisig, within hard-coded ceilings. Fees on existing positions are fixed at creation, but other parameters may change in ways you do not agree with. A guardian can pause new offers and buys or disable a token.

Options and crypto-asset derivatives may be restricted or prohibited in your jurisdiction. Laws and regulatory interpretations may change, which could affect your ability to use the protocol or the protocol's ability to operate.

The Kyte token has not been launched. Nothing on this Site is an offer of securities or tokens, and no statement here should be read as a promise of value, returns or fee distributions.

Kyte is non-custodial. You are solely responsible for your wallet and keys. Lost keys or compromised wallets cannot be recovered by Kyte or anyone else.

Nothing on this Site is investment advice. Options are complex instruments. Consult a qualified adviser and make your own decisions. Questions can be sent to [email protected].