This Protocol Risk Factor Disclosure Statement (this “Disclosure Statement”) aims to disclose, describe, and disclaim known or plausible risks related to the Phylax Protocol and smart contract system (together, the “Protocol”) and its related technology ecosystem (the “Ecosystem”). It is intended to disclaim any legal obligations of Ecosystem participants (“Users” or “you”) to one another and third parties, and to serve as a guide to a range of potential risks, uncertainties, and adverse/negative facts that may be associated with the Protocol, its use and results of its operation. If any of these risks materialize, the Protocol or Ecosystem may be adversely impacted (up to an including catastrophic failure or total shutdown) and any blockchain tokens (“Tokens”) related to or used in or by the Protocol may be irrevocably lost or destroyed or may otherwise lose some or all of their economic value.

It is highly recommended that you carefully review the Disclosure Statement before using the Protocol or engaging in activities related to the Ecosystem, whether directly or indirectly. Nevertheless, this Disclosure Statement might not be a comprehensive account of all relevant risks, uncertainties, or adverse/negative facts. Users of the Protocol are solely responsible for all risks relating to their use of the Protocol or activities related to the Ecosystem. It is recommended that you consult legal, financial, tax and other professional advisors or experts before using the Protocol or engaging in activities related to the Ecosystem. It is not recommended to use the Protocol unless you have prior experience with cryptographic tokens, blockchain-based software applications (including wallet software) and distributed ledger technology.

Beyond this Disclosure Statement, you should also be aware of and consider reviewing the following sources of information relevant to the Protocol and Ecosystem:

No Warranties Etc.  

The Protocol and all other relevant technologies are being provided on an as-is basis, without representation, warranty, insurance or indemnity. All use of the Protocol and related Ecosystem is solely at your own risk.

Irreversibility of Transactions and Lack of Remedies and Insurance for Damages.
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Blockchain transactions are, under normal conditions, irreversible. Any tokens you deposit into Protocol-related smart contracts are subject to potential risk of permanent disablement, impairment, loss or forfeiture in the event of any exploits, bugs or malfunctions of the relevant smart contracts or the underlying blockchain itself, and no remedy will be available from any person due to any damages you may suffer in connection with your use of the Protocol or participation in the Ecosystem or use of any of the relevant technologies.

Experimental Technology; Technical Risks; Independent Due Diligence Required.  
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The technologies and assets involved in the Protocol and Ecosystem are highly experimental and risky, have uncertain and potentially volatile value, and should be directly evaluated by experts in blockchain technologies before use. Use them solely at your own risk. You must not rely on any articles, summaries or published code audits as an accurate description or evaluation of the Protocol, Ecosystem, or any other blockchain system, or for purposes of making any financial or other decision. You must only use the Protocol after thoroughly reviewing and understanding the code of the relevant smart contracts and Ecosystem in your own independent due diligence process.

No Control Over Connected Blockchain Networks.

The Protocol is a permissionless security protocol and coordination framework intended to intended to prevent user-defined pathological blockchain states for dApps running on third-party blockchain networks (each, a “Network”). The Protocol does not, however, control any Network; instead, Networks and their related elements (such as smart contract code or parameters) may be controlled, governed, managed, or administered through a variety of mechanisms particular to each Network, including decentralized Token holder voting (with or without delegation), centralized or permissioned controls, cryptographic multisignature security schemes (described below), or other mechanisms. Such mechanisms may be intentionally or inadvertently used to change smart contract code, parameters, or other elements in a way that could result in the irretrievability, “slashing”, or other loss of Tokens, failure of the Protocol, or other material risks. You should understand the operations and governance of Networks and all related technologies and software code before using the Protocol on or with any Network, and all such use is at your own risk.

No Control Over dApps or Submitters.  
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The Protocol operates through an Assertion management layer composed of smart contract systems, which handle and process software logic related to the creation, amendment, and removal of Assertions. dApps are deployed and/or operated permissionlessly by “Submitters”, who are natural or legal persons who define pathological blockchain states to operators across Credible Layer Networks. While some dApps are immutable, others are configurable by their respective owners. Such Submitters may intentionally or inadvertently change or configure smart contract code, parameters, or other elements in a way that could result in the irretrievability, “slashing”, or other loss of Tokens deposited in or used by the dApp, or other material risks. Even where dApps are configured to be immutable, they may be misconfigured when originally deployed. You should understand the operations and governance of dApps and all related technologies and software code before using the Protocol on or with any Network, and all such use is at your own risk.

Multisignature Protocol Controls
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Certain elements of the Protocol may be subject to modification or control by a cryptographic multisignature security scheme (each, a “Multisig”). Each Multisig, in turn, is administered by natural or legal persons who each hold a private key, a subset of which may (by signing their respective private keys to the same transaction and broadcasting that transaction to blockchain validators) instruct validators to perform Multisig operations. It is possible for Multisig key holders, through Multisig, to change certain parameters, addresses, or smart contracts of the Protocol or other related technologies. This discretion of Multisig key holders constitutes a material risk, and could enable your tokens to be adversely impacted, lost, damaged, used in unexpected ways, subjected to unexpected risks, or misappropriated.

Other Ecosystem Multisigs  
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Systems not constituting a part of Protocol, but used in the functioning of Protocol within the Ecosystem, may also be subject to control by Multisigs, or even by single administrative accounts. Such systems may include dApps, the Networks on which the Protocol is used or deployed, and other relevant technologies. Any mutability of such systems through their respective Multisigs or other control accounts may adversely affect the functioning of the Protocol, Protocol smart contracts, or components of the Ecosystem. Please be aware of all such dependencies and review their applicable code and documentation to understand these risks.

Risks of Token Deposits and Locking.

When you interact with a smart contract system, you are committing such Tokens to the sole and absolute control of the applicable software systems. During the time your Tokens are controlled by the applicable software system, you will lose all powers over and benefits with respect to such Tokens, other than the specific uses that such code allows you to make of such Tokens, if any. You may lose financial opportunities, or the value of your Tokens may decline during such periods. Depending on the exact technology and functions involved, even systems that normally allow immediate or unrestricted use of Tokens can impose delays or have Tokens become unavailable, whether as a result of “slashing events,” “liquidation events,” “illiquidity events”, “insolvency events,” “hacks,” “exploits,” or otherwise. Any such events may lead to partial or total financial loss of your Tokens.

Risks of Slashing.

Cryptoeconomic incentive structures are an inherent aspect of blockchain systems. Such incentive structures include the potential for destruction or forfeiture (“slashing”) of Tokens in response to intentional or inadvertent failures to perform system functions within designated time periods. As a security protocol, Tokens used in dApps or Rollups or otherwise used by Protocol may be directly or indirectly subject to slashing as a result of actions (or inactions) by Submitters and Enforcers. Any such events may lead to partial or total financial loss of your Tokens.

Risks of Misappropriation.

Each Submitter has the ability to configure and deploy dApps and Assertions independently and permissionlessly. Tokens deposited in or used by dApps are subject to the exclusive control of their respective software-encoded rules and procedures. It might be possible for a Submitter to configure a dApp or Assertion in such a way as to permit the Submitter or other person to misappropriate or otherwise irrevocably lose or destroy Tokens. Any such events may lead to partial or total financial loss of your Tokens.

Risks of No Promised Efforts or Resources.
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The Ecosystem is intended to be community-governed. After the public launch of the Protocol, none of the persons who created all or any part of the Protocol or related smart contract system should be expected to have a material ongoing role in Protocol research, development or promotion. Certain relevant parties may elect to undertake limited ministerial activities directly or indirectly related to the Protocol, such as maintaining availability of a web interface to the Protocol, but no promise, guarantee or assurance of such ministerial efforts or any other efforts is being made, and any such efforts which do occur may be abandoned at any time, with or without advanced notice.

No person or entity has promised you, or assumed any obligation to you to exert or provide financial or other support for, any efforts, capital or resources in connection with the Protocol. No person or entity has promised you, or assumed any obligation to you to exert or provide financial support for, any research, development, promotion, marketing, maintenance, monitoring, or improvements relating to the Protocol. Any past, present or future efforts on the part of any entity or person are being conducted on a voluntary and not committed basis, and are not intended as, and must not be construed or relied upon as, a promise of continuing efforts.

Risks of Decentralized Governance.  
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Any smart contract parameter adjustments, network client updates, dApp or Rollup (re-)configurations, or other changes required to the Protocol or any related components may require approval of many different stakeholders (including Token holders on different Networks, Network operators, and other groups), which comprise a dispersed group of persons that may be unable or unwilling to sufficiently coordinate to produce action.

Informational Purposes Only; No Warranties.  
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All publications, articles, blogs, tweets, messages, posts, documents, statements, analyses and information relating to the Protocol or Ecosystem (collectively, “Ecosystem Content”) are intended solely for general educational purposes regarding the software systems relating to the Protocol or Ecosystem and not as financial, legal, accounting, investment, or other advice or services. Accessing or using the Ecosystem Content does not create any fiduciary, service or other contractual or common law relationship between you and the persons who produce or publish the Protocol.
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The Ecosystem Content is not intended as and does not provide or create or constitute a part of any advice, representation, warranty, certification, guarantee, promise, offer, solicitation, undertaking, service, indemnity, insurance, partnership, joint venture, or enterprise, express or implied. The Ecosystem Content is not and does not constitute a part of an offer or agreement to make any products or services available now or in the future, to maintain or update or improve any technologies or content, or to sell or buy or otherwise transact in any asset or enter into any transaction.
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The Ecosystem Content may be inaccurate, incomplete, out-of-date, or biased. The Ecosystem Content may utilize incorrect data and assumptions, make incorrect predictions, or fail to account for material risks. The Ecosystem Content was not prepared by fiduciaries, has not been assessed by independent third parties and may have been prepared by persons with undisclosed material conflicts of interest.
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All use of the Ecosystem Content and the technologies described therein is solely at your own risk. You must not rely on the Ecosystem Content as a basis for making any financial or other decision but must instead conduct your own independent due diligence into all relevant matters or engage your own professional advisors to conduct such due diligence on your behalf.

No Governmental/Regulatory Review or Approval.

The Ecosystem Content and the matters described in the Ecosystem Content have not been reviewed, approved, endorsed, opined on, licensed or registered by or with any regulator or other entity (including governmental agencies, commissions, and self-regulatory organizations), and the authors of the Ecosystem Content are not licensed to provide any legal, financial, accounting, investment, broker, dealer, or other advice or services.

Uncertain Nature of Forward-Looking Statements; No Duty to Update.  

The forward-looking statements in the Ecosystem Content are subject to numerous assumptions, risks and uncertainties, and thus the events described or predicted therein are subject to change or to fail to occur in accordance therewith. The authors of the Ecosystem Content undertake no obligation to update, supplement or amend any statement that becomes inaccurate or incomplete after the date on which the Ecosystem Content is first published, or to alert the public as to any such inaccuracy or incompleteness, whether such inaccuracy or incompleteness arises as a result of new information, changes in plans, unanticipated events or otherwise.

Risk of Third-Party Hacks and Social Engineering Attacks.

Like any other software, the Protocol and Ecosystem could be at risk of third-party malware, hacks, or cybersecurity breaches, including social engineering attacks directed at or through social media channels used to provide Ecosystem Content or to communicate with Users. In the event of such an attack, user assets may be misappropriated by theft or fraud. Users are responsible for securing and monitoring their own assets and confirming that the smart contracts or function calls thereof are consistent with user intentions.