> For the complete documentation index, see [llms.txt](https://docs.megatao.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.megatao.com/trading/risk-warnings.md). # Risk Warnings Trading perpetual futures on MegaTAO involves substantial risk. Read this before trading. ## Leverage risk Leverage amplifies both gains and losses. At 3x leverage, a \~23% adverse price move results in liquidation and near-total loss of your margin. At 2x leverage, this threshold is approximately 40%. You can lose your entire deposited margin on a single trade. ## Liquidation risk Positions are automatically liquidated when the margin ratio falls below 10%. Liquidation incurs a 5% penalty on remaining margin. Liquidation is irreversible. In volatile markets, prices can move rapidly past the liquidation threshold. You may not have time to add margin or close the position manually. ## Market risk Alpha token prices can be highly volatile. Prices can move significantly in short timeframes due to: * Changes in subnet demand and performance * Broader crypto market conditions * Low liquidity in underlying Alpha token pools * Large trades affecting pool reserves Past price performance does not predict future results. ## Smart contract risk MegaTAO's smart contracts have been audited by BitSec and XORs Software, but no audit eliminates all risk. Smart contracts may contain undiscovered vulnerabilities that could result in loss of funds. The protocol is in beta and contracts are upgradeable via the UUPS proxy pattern. ## Oracle risk Prices are derived from on-chain pool reserves. If the underlying pool is manipulated or experiences abnormal conditions, the oracle price may not reflect fair market value. The protocol includes safeguards, but no protection is absolute. ## Protocol risk MegaTAO is in beta. The protocol is actively being developed and upgraded. Parameters such as leverage limits, deposit caps, and fee structures may change. The protocol vault acts as counterparty to trades. In extreme scenarios, vault insolvency could affect withdrawals. ## Network risk Bittensor EVM is a relatively new network. Network outages, congestion, or RPC failures could prevent you from closing positions or adding margin during critical moments. ## Your responsibility * Only trade with funds you can afford to lose completely * Understand how leverage, margin, and liquidation work before trading * Monitor your positions and margin ratios * Do not rely on being able to close a position at a specific price --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.megatao.com/trading/risk-warnings.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.