Risk Management
Price volatility
The risk. Bitcoin is volatile. A fall reduces what your collateral is worth at settlement, while your repayment obligation stays the same.
The controls.
Collar protection below the put strike, bounding how far your loss can go
50% LTV a conservative loan against the collateral value
No liquidations a price fall cannot force a sale of your collateral
Fixed 12-month term no repricing, no margin calls, no mid-term changes
What remains with you. The fall between your deposit price and the put strike. Protection bounds the outcome; it does not remove market exposure.
Capped upside
The risk. Gains above the call strike are given up. In a strong bull market you will underperform simply holding.
The controls.
Strike levels published before you claim, so you can decide with the numbers in front of you
Strikes fixed for the full term they cannot be moved against you
Claiming is optional
What remains with you. The opportunity cost. This is not a defect to be managed away it is the price of 0% financing and downside protection.
Counterparty risk
The risk. FalconX holds the collateral under the collar for the duration of the term.
The controls.
An established institutional counterparty, named up front
Vault infrastructure and asset verification through Accountable
Reconciliation across the vault lifecycle
What remains with you. Institutional counterparties can fail. Exposure is concentrated in a single counterparty for twelve months.
Operational risk
The risk. Collar settlement, distribution and redemption depend on off-chain processes and approvals.
The controls.
Approval layers for distribution and redemption
Defined redemption windows rather than ad-hoc processing
Reconciliation between on-chain records and off-chain positions
What remains with you. Timing risk. The 7–15 day redemption window exists because these processes take time.
Smart contract risk
The risk. The vault holds deposits and governs claims, repayment and redemption. A flaw could affect funds.
The controls. Audits and security disclosures will be published at Security and Audits.
What remains with you. Smart contract risk never reaches zero, audited or not.
Controls reduce risk. They do not remove it. Read the Risk Disclosures in full before depositing.
Last updated