RISKS TO KNOW BEFORE YOU SIGN.

• Single-sided deposit, dual-sided withdrawal. The position can return both pool tokens because range management trades inventory as price moves.
• Impermanent loss and range risk. Fees may not offset the difference versus holding. Out-of-range liquidity stops earning active swap fees until the strategy repositions or price returns.
• Token and pool risk. A token can collapse, a stable asset can lose its peg, liquidity can thin, and execution can move sharply.
• Smart-contract and network risk. Vault, guard, pool, wallet, or chain reads can fail or report late.

• You can lose the position. Interest, utilization, and keeper actions can reduce or close it. Punch does not manage it.
• Supply is still LP risk. Funded books can zap a one-token deposit on the deepest Uniswap v4 book; a zero-equity book can do the same when a sibling v4 book has depth, otherwise it starts with both tokens. Both become two-sided full-range LP. sL is a share unit, not a token amount; Engine permanently locks the first 1,000 shares when a book is seeded, and redemption can be utilization-capped. Punch marks the full position from live share price and pool composition, but labels the separately quoted redeemable-now amount as the executable value.
• Spenders differ by action. Engine supply, borrow, atomic margin, and management target the pinned AegisRouterV1, with Permit2 where token funding is required. Direct-pool Spot executes through Uniswap Universal Router. Never treat AegisEngine as the spender.
• Atomic execution can still revert. Punch refreshes the debt, capacity, dynamic fee, and swap bound, then simulates the exact open, adjustment, or close calldata. A failed router call rolls back the whole recipe, but a successful leveraged position remains exposed to price movement, debt growth, utilization, and keeper action.
• It is not a perpetual position. Engine debt is LP-shaped and denominated in L. There is no mark price, funding rate, stop-loss, or perpetual liquidation price. Book-native take-profit limits can rest on the Aegis book after a Long or Short is open; they fill only if price trades into that tick, and keepers can still reduce an unhealthy vault. Directional leverage and LTV are different metrics. Closing must repay all accrued L; the atomic close can rebalance and settle to the selected asset, subject to its protected minimum output.
• Smart-contract and first-loss risk. Engine, hook, router, oracle, and keeper paths can fail or report late.

Flow KLP is trader counterparty capital and holds PYUSD0, WFLOW, WETH, and WBTC exposure. Trader profits and falling basket assets can reduce KLP value. Oracle updates can require a paid transaction followed by a time-sensitive manager action; an already-paid update fee is not refundable when the second action is delayed or rejected.

Outcome-weighted rewards are a capped incentive mechanic, not loss insurance. Punch reward schedules must enforce a worst-case cost floor, but PUNCH itself can be volatile or worthless and cannot make a losing strategy whole. See Lose-to-Earn.

A Core Pool FIFO claim can remain unpaid for an unknown period; its displayed pool cash is not the same as net equity. Queue-age percentiles and realized repayment throughput describe historical pressure but do not promise a settlement date. A third party may independently discount a transferable claim, but Punch does not operate or endorse a secondary claim market. A failed direct token delivery may move value into an owner-controlled funded state or leave it as FIFO principal; it does not turn that value into free pool capital. Modular KLP LPs bear class-local trader-profit, reporter-liveness, redemption-delay, and market-quality risk. A matured LP exit remains subordinate to current NAV, trader-profit reserves, and encumbered fees. A dKLP class carries elevated emerging-asset and oracle risk even with admission caps. Immediate settlement is one dimension, not a global safety ranking: fees, market coverage, oracle risk, LP capital conditions, and governance differ by class. Read Punch Vaults and Architecture.

• Smart contract risk. Class-aware custody, settlement, FIFO, LP NAV, reward, and oracle paths can contain defects even when their economic invariants are explicit.
• Oracle risk. Prices come from external feeds or onchain venue observations with staleness, uncertainty, depth, and divergence gates. A feed failure can delay execution; a bad value inside the accepted envelope can execute.
• Execution and oracle path. Major markets pin one selected signed provider such as Chainlink Data Streams or paid Pyth Pro; emerging markets use venue-specific TWAP adapters and live asset facts. Pyth Pro's accepted confidence amount widens execution conservatively but is not a promise of statistical coverage. There is no silent automatic provider failover. Failed admission should stop new exposure without disabling the reviewed reduction and liquidation path; see Architecture.
• Parameter and governance risk. Fees, leverage, profit caps, reward curves, market tiers, and admission limits may change for new exposure. Delayed governance and position snapshots reduce surprise but do not eliminate governance failure.
• Operational risk. Keeper, RPC, chain, report, monitoring, bridge, or governance-execution failures can delay or prevent intended behavior even when contract invariants are sound.

Access restrictions are enforced at the Punch interface and may also apply to incentive eligibility:

• The trading interface is not available to persons in the United States or its territories, persons on sanctions lists, or persons in other restricted jurisdictions.
• Wallets are screened against sanctions lists regardless of geography.
• Users in open jurisdictions attest to their eligibility on first interaction.
• The same jurisdiction rules apply to every incentive ledger: trading-reward accrual, points, and airdrop claims may be checked at eligibility and claim time, not just at the front door.

Circumventing these restrictions (including via VPN) violates the terms of use and forfeits incentive eligibility.

The formal product limits—including deferred Core Pool profit, KLP capital risk, reward non-insurance, oracle uncertainty, and non-guaranteed token value—are summarized in the design paper's limitations.