> For the complete documentation index, see [llms.txt](https://docs.rayze.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rayze.io/trust-and-reference/risks-and-legal.md).
# Risks and Legal
Understand the risks of trading perpetuals, investing in Rayze Funds, and using onchain financial infrastructure.
Rayze gives traders and investors a clearer record of who made each decision, where capital sits, and how it performed. That evidence can improve judgment, however, it cannot guarantee an outcome, prevent a loss, or replace your own responsibility.
{% hint style="danger" %}
Trading perpetuals and investing in Rayze Funds can result in the partial or total loss of capital. Leverage can accelerate losses and liquidate positions. Use only capital you can afford to lose.
{% endhint %}
Risk at a glance
| Risk | What it means |
| --------------------------------- | ------------------------------------------------------------------------------------------------- |
| **Market risk** | The price of an asset or position can move against you. |
| **Leverage and liquidation risk** | Borrowed exposure magnifies losses and can force positions to close. |
| **Fund strategy risk** | A Fund Admin can make poor decisions, concentrate exposure, or fail to execute the stated thesis. |
| **Execution and liquidity risk** | Orders can fill at a different price than expected, fill partially, or fail to execute. |
| **Funding and fee risk** | Trading fees, funding payments, performance carry, and withdrawal fees reduce returns. |
| **Smart contract risk** | Code can contain bugs, vulnerabilities, or unexpected behavior, even when audited. |
| **Bridge and network risk** | Cross-chain transfers and onchain settlement depend on multiple networks and contracts. |
| **Venue and protocol risk** | Integrated infrastructure can experience outages, exploits, rule changes, or unavailable markets. |
| **Valuation risk** | Oracle prices, market prices, and data updates can diverge or become temporarily stale. |
| **Account risk** | A compromised email, device, wallet session, or trading permission can be misused. |
This list is not exhaustive. Several risks can occur at the same time and compound one another.
Perpetual trading risk
Perpetuals do not expire. A position remains open until you close it, it is liquidated, or another order closes it. The longer a position remains open, the more it can be affected by price movement, funding, fees, and changes elsewhere in a cross-margin account.
Leverage increases market exposure without requiring the full position value as collateral. It can increase gains, but it also moves a position closer to liquidation and increases the speed at which capital can be lost.
Hyperliquid liquidates a position when account equity falls below its maintenance-margin requirement. In cross margin, eligible positions share collateral, so a loss in one position can place more of the account at risk. Liquidation prices shown in the terminal are estimates and can change as funding, account equity, and other positions change.
[Read Hyperliquid's margining](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/margining), [liquidation](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/liquidations), and [funding](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/funding) documentation before trading.
Execution, funding, and fees
A displayed market price is not a guaranteed execution price. Fast markets and thin order books can create slippage. Market orders prioritize execution over price, while limit orders may fill only partially or not at all.
Funding payments can either increase or decrease a perpetual trading balance. The rate changes with the market and is exchanged between long and short positions on Hyperliquid. A profitable price move can still produce a weaker net result after funding and fees.
Rayze fees, Hyperliquid fees, funding payments, and Fund performance carry are separate costs. Review the complete [Fees](/trust-and-reference/fees.md) page and the figures shown in each confirmation screen.
Investing in a Rayze Fund
Investing in a Fund means backing the decisions of its Admin. Members participate in the Fund's complete outcome—not only its strongest positions. Every gain, loss, fee, funding payment, and allocation decision contributes to the Fund's NAV and the value of its shares.
A Fund Admin can control strategy without owning the Members' capital. That separation protects ownership; it does not protect performance. An Admin can take excessive risk, concentrate the Fund, depart from an earlier thesis, remain inactive, or make decisions that lead to liquidation and loss.
Rayze Funds have no Member lockups, and Fund Admin approval is not required to withdraw or exit. Fund assets remain available for onchain settlement around the clock. The value received can still reflect market movement, trading PnL, carry, fees, and execution while the exit is processed.
A trader's personal record and a Fund's record are separate. Personal success does not guarantee that the same trader will perform equally with a different strategy, larger capital base, or greater responsibility.
Technology and third-party risk
Rayze connects independent systems across [Privy](https://docs.privy.io/), [Arbitrum](https://docs.arbitrum.io/), [Safe](https://docs.safe.global/), [Circle CCTP](https://developers.circle.com/cctp), [CoW Protocol](https://docs.cow.fi/), and [Hyperliquid](https://hyperliquid.gitbook.io/hyperliquid-docs). Each system introduces its own security, availability, governance, and operational risks.
* **Smart contracts:** Audits and testing reduce known risk. They cannot prove that code is free from every vulnerability or failure mode.
* **Wallets and permissions:** Different permissions control wallet transactions, trading actions, and Fund administration. A compromised permission can be abused within the authority it carries.
* **Networks and bridges:** Congestion, validator behavior, finality, contract faults, or cross-chain messaging failures can delay or interrupt capital movement.
* **Venues and protocols:** Market availability, fees, leverage limits, rules, and infrastructure can change independently of Rayze.
* **Prices and NAV:** Fund valuation depends on asset prices, venue equity, and capital in transit. Stale or incomplete data can pause share-sensitive actions until the Fund state is complete again.
[Security and Trust](/trust-and-reference/custody-and-security.md) explains where capital lives and what each permission can do. [Technical Architecture](/trust-and-reference/technical-architecture.md) explains how those systems connect.
Transparency is evidence—not protection
An onchain transaction proves that an action occurred. It does not prove that the action was wise.
A verified account connects a profile to a linked identity. It does not verify skill, honesty, or future performance. A public track record shows how someone performed in the past. It does not guarantee how they will perform next.
Posts, leaderboards, live positions, Fund activity, and performance analytics should be treated as information—not an endorsement, recommendation, or substitute for independent judgment.
Your responsibility
Before you trade or invest:
* Understand the product, strategy, fees, leverage, and maximum loss you are accepting.
* Review the trader's record and the Fund's record separately.
* Confirm the network, asset, amount, destination, and action before signing.
* Protect your email, device, wallet access, authentication codes, and active sessions.
* Confirm that each product and market is available to you under the laws that apply where you live.
* Consider independent financial, legal, and tax advice for your circumstances.
Legal disclaimer
Nothing on Rayze—including its documentation, profiles, posts, leaderboards, analytics, or Fund pages—constitutes financial, investment, trading, legal, or tax advice. Rayze does not guarantee returns, the competence of a trader or Fund Admin, uninterrupted access, or the security of every integrated system.
You are responsible for your own decisions and for complying with the laws, regulations, tax obligations, and third-party terms that apply to you. Product availability may vary by jurisdiction, account, provider, and market.
The next page answers common questions about Rayze.