Risk Disclosure Statement

1. Derivatives & Futures Trading Risks

Xylos offers perpetual futures contracts and other derivative instruments. Unlike purchasing an underlying asset, derivative trading involves unique and significant risks:

• Perpetual futures do not have an expiry date, and positions can remain open indefinitely. Funding rates are charged or credited periodically, which can erode profits over time, especially in directional markets.
• Derivative prices are derived from underlying reference prices (mark prices) and may not exactly mirror spot market prices at all times. Basis risk, premium, and discount can affect your position value.
• In times of extreme market stress, derivative markets may experience rapid deleveraging, auto-deleveraging (ADL), or insurance fund depletion, which can affect the settlement of profitable positions.
• Order types (market, limit, stop-loss, take-profit) are executed on a best-effort basis. Slippage, partial fills, and gaps may occur, especially during volatile conditions.

2. Leverage Risk

• Amplified Losses: Leverage multiplies both gains and losses proportionally. A position with 500x leverage experiences gains and losses 500 times greater than the underlying price movement relative to your margin.
• Margin Requirements: You must maintain sufficient margin in your account at all times. If your margin falls below the maintenance margin requirement, your position will be liquidated automatically.
• Total Loss: It is possible to lose your entire deposited balance, and in some market conditions, losses could exceed your initial deposit depending on the margin mode and market structure.
• Not for Beginners: High-leverage trading is extremely risky and is intended only for experienced traders who fully understand the mechanics of leveraged derivatives. We strongly recommend starting with lower leverage levels and using our paper trading feature to practice.

3. Cryptocurrency Volatility

• Cryptocurrency markets are characterized by extreme price volatility. Daily price swings of 10-20% or more are not uncommon, and some assets have experienced 50%+ declines in a single day.
• Cryptocurrency markets operate 24 hours a day, 7 days a week, 365 days a year. Price movements can occur at any time, including during periods when you may not be actively monitoring your positions.
• The cryptocurrency market is still relatively nascent and can be influenced by social media sentiment, regulatory announcements, exchange-specific events, whale activity, and other unpredictable factors.
• Altcoin markets (smaller capitalization tokens) are particularly susceptible to extreme volatility, low liquidity, and potential manipulation.
• Historical volatility and liquidity patterns may not predict future conditions. Markets that were previously liquid can become illiquid rapidly.

4. Liquidation Risk

Liquidation is the forced closure of your position when your margin is insufficient to maintain it. Key points:

• Liquidation occurs automatically when the mark price reaches your liquidation price. The liquidation price is determined by your entry price, leverage, margin mode (isolated or cross), and the maintenance margin rate for the instrument.
• In isolated margin mode, only the margin allocated to the specific position is at risk. In cross margin mode, your entire account balance serves as margin and can be lost if a position is liquidated.
• Xylos employs a tiered liquidation system with graduated maintenance margin rates. Larger positions require higher maintenance margins and are more susceptible to liquidation.
• During extreme volatility, the mark price may move rapidly through your liquidation price, resulting in liquidation at a price worse than your calculated liquidation level (slippage on liquidation).
• Stop-loss orders do not guarantee protection against liquidation. In fast-moving markets, prices may gap through your stop-loss level.
• Liquidated positions cannot be recovered. The margin used for the liquidated position is lost permanently.

5. Counterparty Risk

• By trading on the Platform, you are exposed to Xylos as a counterparty. While we maintain insurance funds and risk management systems, there is inherent risk in entrusting funds to any centralized platform.
• Xylos is not a bank and deposits are not protected by government deposit insurance schemes (such as FDIC or similar programs).
• In the unlikely event of platform insolvency, your deposits may not be fully recoverable. We maintain segregated accounts and insurance reserves, but these may not cover all losses in extreme scenarios.
• Third-party services integrated with the Platform (payment processors, card issuers, blockchain networks) carry their own counterparty risks.

6. Technology & Operational Risk

• System Failures: The Platform relies on complex technology infrastructure. Hardware failures, software bugs, database errors, or network outages could disrupt trading, delay order execution, or prevent you from managing your positions.
• Network Latency: Internet connectivity issues, high latency, or network congestion may affect the speed and reliability of order submission and execution.
• Blockchain Network Issues: Deposits and withdrawals depend on blockchain networks, which may experience congestion, high fees, hard forks, or outages that are beyond our control.
• Cybersecurity: Despite robust security measures, no system is immune to cyberattacks. Hacking, phishing, malware, or social engineering attacks could compromise accounts or platform operations.
• Data Feed Errors: Market data feeds, price indices, and mark prices may occasionally contain errors, delays, or temporary inaccuracies that could affect trading decisions and liquidation triggers.
• Maintenance Windows: Scheduled and unscheduled maintenance may temporarily limit platform availability. Open positions remain active during maintenance periods.

7. Regulatory Risk

• The legal and regulatory landscape for cryptocurrency and derivative trading is evolving rapidly across jurisdictions. New laws or regulations could restrict, prohibit, or materially affect your ability to use the Platform or trade certain instruments.
• Regulatory actions against cryptocurrency exchanges, DeFi protocols, or stablecoin issuers could have cascading effects on the broader market and the value of assets traded on the Platform.
• Changes in tax laws could affect the taxation of your trading profits, deposits, withdrawals, or the use of USDT as a settlement currency.
• Xylos may be required to restrict services in certain jurisdictions, implement additional compliance requirements, or cease operations in specific markets due to regulatory developments.
• It is your sole responsibility to determine and comply with the laws and regulations applicable to your trading activities in your jurisdiction.

8. Forex & Commodity Market Risks

• Foreign exchange markets are influenced by central bank policies, interest rate decisions, geopolitical events, economic data releases, and global trade flows. These factors can cause sudden and significant price movements.
• Commodity prices (gold, silver, oil, natural gas, etc.) are affected by supply and demand dynamics, weather events, geopolitical instability, OPEC decisions, and macroeconomic conditions.
• Equity indices and individual stock derivatives are subject to corporate earnings reports, regulatory actions, sector rotations, and broad market sentiment shifts.
• Market gaps can occur around major economic announcements, market opens, or geopolitical events. Gaps can trigger stop-losses and liquidations at prices significantly different from the intended level.

9. Not Investment Advice

• You should consult with qualified financial, legal, and tax advisors before making any trading or investment decisions.
• AI-powered trading bots, signals, and copy trading features are tools, not investment advice. Past performance of any bot, strategy, or trader is not indicative of future results.
• Social proof feeds, leaderboards, and community features display user-generated content and results that may not be representative of typical outcomes.
• Market analysis, research articles, and insights published on the Platform reflect the opinions of their authors and do not constitute financial advice.

10. Past Performance Disclaimer

Past performance is not indicative of future results. Any historical data, backtesting results, simulated performance, or track records presented on the Platform are provided for informational purposes only and do not guarantee future returns. Simulated trading (paper trading and challenge accounts) does not involve real financial risk and may not accurately reflect the performance that would be achieved in a live trading environment due to differences in execution, slippage, liquidity, and emotional factors.

11. Only Trade What You Can Afford to Lose

12. Acknowledgment

By using the Xylos platform, you acknowledge that you have read, understood, and accepted this Risk Disclosure Statement. You confirm that:

• You understand the risks of derivative trading with high leverage.
• You are aware that you could lose your entire deposited balance.
• You are trading at your own risk and based on your own judgment.
• You have not received investment advice from Xylos.
• You have reviewed and agree to the Terms of Service and Privacy Policy.

13. Contact

If you have questions about this Risk Disclosure or the risks associated with trading on the Platform: