Smart Contract Risk Disclosure

Contracts can contain bugs

The protocol vendors well-known upstream components and adds original contracts. Any of them can contain defects that cause loss of collateral, incorrect payouts or stuck funds.

Audits reduce but never remove risk

No external audit has been completed for this protocol. Internal testing exists, but internal testing is not an audit and an audit is not a guarantee.

Transactions are irreversible

Signed and confirmed transactions cannot be recalled. A mis-set slippage tolerance, a wrong amount or a trade on the wrong market is final.

Network conditions

Congestion, outages or a testnet reset on Arc can prevent trading, resolution proposals, challenges and claims from being submitted in time.

Resolver failure

The bonded resolution adapter depends on someone proposing an outcome and on economic incentives to challenge a wrong proposal. If nobody proposes, or nobody challenges a wrong proposal, settlement can be wrong or delayed indefinitely.

Token approvals

Trading requires approving USDC spending. Broad or unlimited approvals remain valid until revoked, and any defect or compromise in an approved contract can expose the approved balance.

Third-party dependencies

The protocol builds on Gnosis Conditional Tokens and a fixed-product market maker, on the USDC contract, and on Arc itself. A failure in any dependency is a failure for the protocol.

Deployed contracts and source

The exact deployed addresses, their verification status and the deployment block are listed on the contracts page. The source for the protocol contracts lives in the repository, with upstream attribution in OPEN_SOURCE_NOTICES.md.

Known limitations

• Deployed on Arc Testnet only; no mainnet deployment exists.
• Trading is market-order only against a fixed-product market maker, no order book, no limit orders.
• Resolution uses a single bonded adapter; alternative resolvers are not yet deployed.
• Comments and off-chain moderation tooling are not implemented.
• No external audit and no bug-bounty payout programme yet.

Upgradeability and admin controls

• The protocol contracts are not proxy-upgradeable: deployed logic cannot be rewritten. New behaviour requires new deployments, and the interface must be pointed at them.
• A protocol configuration contract holds economic parameters, fee splits, bonds, minimum liquidity, minimum duration and dispute window, and has a privileged owner that can change them for future activity.
• The privileged owner cannot resolve markets, seize collateral, or take positions from users.
• The owner is currently a single deployer key, not a multisig or timelock. That is a real centralisation risk and is disclosed rather than glossed over.