Understand the risks
Using Faven involves real financial risk. You can lose money or assets, and a premium does not make a trade safe. Only use money and assets you can afford to lose. This page is general information, not investment, legal, or tax advice.Crypto asset risks
- Prices can change fast. SOL, USDC, and other crypto assets can lose much or all of their value. A stablecoin can also lose its dollar value.
- You control your wallet. If you lose your recovery phrase or approve a malicious transaction, Faven cannot restore your assets. Never share your recovery phrase or private key.
- Rules and taxes may change. Your use of crypto and Faven “buy lower” and “sell hiigher” strategies may have legal or tax consequences where you live.
Solana risks
Faven transactions depend on the Solana network and services that connect to it.- As any technology Solana network, validators, RPC providers, wallets, or price feeds can be slow or unavailable. Same as electricity, outages happens.
- A transaction can fail, expire, be delayed, or cost a network fee even when it does not complete.
- Network congestion can make it harder to act before an expiry or exercise deadline.
- Wallet software or a Solana service can show incomplete or incorrect information.
- Solana can experience upgrades, outages, forks, or other events that affect access to your assets or transaction timing.
Wrapped and bridged token risks
Assets such as WETH and cbBTC are not the native ETH or BTC networks’ original coins. They rely on an issuer, custodian, bridge, or both to hold reserves and support redemption.- The token may lose its expected price relationship with the asset it represents.
- A bridge, custodian, issuer, or reserve can fail, be hacked, become insolvent, pause withdrawals, or change its rules.
- The token can be frozen, restricted, delisted, or become impossible to redeem.
Smart contract and price risks
Faven uses on-chain programs, also known as smart contracts, to lock collateral and settle trades. Software can contain bugs or be attacked. audits, cannot prove that software is safe.- A bug, exploit, configuration error, upgrade, pause, or failure of an authorized operator can delay or reduce access to assets.
- Faven uses market-specific rules and price data from separate providers called oracles. An oracle or its price source can be wrong, stale, unavailable, or affected by market disruption.
- Confirmed transactions and the rules enforced only by the on-chain program determine the result.
Risks of a Faven trade
When you open a Buy Lower or Sell Higher trade, you receive a premium for making a price commitment. Faven locks the collateral needed to keep that commitment until the trade ends or settles. The premium is not interest. Once your trade executes, you receive the premium upfront and keep it, but it does not guarantee that the trade will be profitable or protect you from changes in the value of the assets you hold or receive. You currently has no ability to close the trade early before the chosen end date. The locked cannot be used until the expiry and settlement process are complete.If your goal is to buy or sell
You may use a trade because you want to buy an asset at a lower price or sell it at a higher price than its current price. The key risk is that the trade may not happen.- With Buy Lower, the trade may expire unused even if the price will be slightly below your target price, leaving you with your original locked asset instead of the asset you wanted to buy.
- With Sell Higher, the trade also may expire unused, and also even if at the end date the price of the asset is slighly above your target, leaving you with the original asset instead of the sale you wanted.
- Even when a price reaches your target, the buyer and/or holder of your price commitement may not use your trade. This is because buyer has an option to execute your trade at your terms but not obligation. Do not treat a Faven trade as a guaranteed order to buy or sell.
- If the trade does settle, the agreed price can still be worse than the market price at that time. For example, you may buy an asset that continues to fall or sell an asset that continues to rise.
If your goal is to keep the same tokens and collect premium
Some people use repeated trades to try to collect premiums while keeping the same asset. The key risk is the opposite: your trade can be used, so you no longer hold the same token.- With Sell Higher, your chosen terms of your trade will be used to sell the locked asset. If its price rises sharply above the agreed price, you give up that additional upside.
- With Buy Lower, your locked asset can be used to buy the selected asset, again only on the terms you chose to open your trade. If that asset falls sharply, you may receive an asset worth less than the amount you paid.
- There is no automatic rolling from one position into the next. A later trade may have no quote, a lower premium, different fees, or terms that no longer fit your plan.
- Each new trade require another transaction and network fee.