RISKS TO KNOW BEFORE TRADING.

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 KLP Liquidity 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.