Risk Disclosures
3.3 Risk Disclosures
Modulexo is deterministic infrastructure. Determinism does not eliminate risk.
This section outlines the primary risk categories relevant to participants.
I. Smart Contract Risk
All system behavior is governed by deployed smart contracts.
Risks include:
• Undiscovered implementation vulnerabilities • Edge-case logic behavior • Unexpected interactions with external contracts • Blockchain-level vulnerabilities
Although constraints and reentrancy protections exist, no contract can be considered risk-free.
Participants assume contract-level risk.
II. Parameter Risk
RecyclingEngine pricing depends on:
baseWeightPriceWei
decayPerDayPPM
linearGrowthSlopeWeiPerDayIf parameters are owner-controlled or governance-controlled:
Future changes may alter:
• Weight cost • Distribution dynamics • Economic incentives
These changes are transparent but may materially affect outcomes.
III. Governance Risk
If contracts are governed via:
Governor → Timelock
Share holders may vote to:
• Adjust treasury behavior • Modify parameters (if governed) • Redirect future flows
Governance may produce outcomes not aligned with individual expectations.
If ownership remains with a private address, that address retains defined authority.
This is verifiable via owner().
IV. Economic Participation Risk
Participation involves:
• Permanent token surrender • Native value payment • Accounting weight allocation
There is no guarantee that:
• Native distributions will exceed payments • Future recycle activity will increase • Weight pricing will remain favorable
Distribution depends entirely on future activity.
No fixed return exists.
V. Liquidity Risk
Accounting weight:
• Is not transferable • Is not tradable • Has no redemption guarantee
Shares in the Fund:
• Do not imply secondary market liquidity • Represent on-chain treasury participation only
There is no liquidity promise.
VI. Volatility Risk
Native token value (e.g., ETH, MATIC, BNB):
• May fluctuate • May lose market value • May experience extreme volatility
Distribution is denominated in native token.
Native token volatility directly affects perceived value.
VII. Registry Risk
Registry may:
• Enable new assets • Disable assets • Apply caps
Changes may affect availability of recycle operations.
This does not alter historical state.
VIII. Early Participation Effects
When totalWeight is low:
• Early participants may receive larger proportional allocation
When totalWeight grows:
• Individual proportional share may decrease
This is mechanical.
No dynamic dampening exists unless parameterized.
IX. Bridge and Cross-Chain Risk (If Applicable)
If share rails are bridged to Ethereum:
Risks include:
• Bridge failure • Delayed execution • Cross-chain congestion
Bridge failure does not affect recycle ledger math but may affect treasury inflows.
X. Operational Risk
Front-end interfaces may:
• Display delayed data • Experience outages • Reflect stale reads
On-chain state remains authoritative.
Users are encouraged to verify via explorer.
XI. Regulatory Risk
Blockchain participation may be subject to:
• Local regulatory interpretation • Tax implications • Reporting obligations
Modulexo contracts do not enforce jurisdictional compliance.
Participants are responsible for legal assessment.
XII. Irreversibility
Token surrender via SponsorshipLedger is permanent.
There is no reversal mechanism.
Recycle execution is atomic and irreversible.
Claims cannot be undone once executed.
XIII. No Performance Guarantee
Modulexo does not guarantee:
• Profit • Recovery • Yield • Treasury growth • Governance outcome
Participation outcomes depend solely on:
• Usage activity • Parameter state • Governance decisions
XIV. Risk Summary Table
Contract Risk
Smart contract logic
Audits, transparency
Parameter Risk
Owner / Governance
On-chain verification
Economic Risk
Participation model
Deterministic math
Volatility Risk
Native token
External market
Governance Risk
Share voting
Transparent proposals
Liquidity Risk
Non-transferable weight
Structural
No risk is eliminated entirely.
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