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Providing liquidity to Fade means being the house. The house wins on average and loses often. This page states what can go wrong before you deposit.

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Variance

Every wager’s expected value favours the pool, but any single wager, day or month can go against it. Two paytables with the same edge can differ enormously in variance: a game that pays a little 90 % of the time is calm, a 1 000× jackpot is not. At low volume, the number of wagers is too small for the edge to dominate the luck of the draws. In Fade’s own simulations of a pool at one turn of volume a month (a month’s wagers equal to the pool’s assets), roughly one month in three ends down. Losing months become rarer as volume grows relative to the pool; a larger pool thins the drawdown tail but does not change how often a month ends down at the same turnover.

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No headline yield

The pool’s return is not a rate anyone sets. It is the pool’s share of the edge on the volume wagered, and it scales with one thing: how much is wagered relative to the pool.
Two consequences:
  • Capital arriving before volume lowers everyone’s return. A deposit that is not matched by more wagering lowers turnover. Nothing in the protocol compensates for it, by design.
  • Any quoted yield is a statement about future volume. Fade does not publish one. Look at the realised share price history (every strike records it) and the volume behind it, and judge the distribution of outcomes, not a single number.

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What limits a loss

The caps are refusals at open: a wager is accepted in full or not at all. The breakers stop new wagers only. None of them can block a settlement, a strike, a claim or a withdrawal request.

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Liquidity

  • Exits are not instant. A withdrawal clears at the next strike. Capital reserved by open wagers cannot leave; under heavy use a withdrawal is paid in part and completed over the following epochs.
  • A request cannot be cancelled. Choose amounts deliberately.
  • Shares can be sold to anyone willing to buy them, at a price you agree. Fade does not run or price that market.

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Protocol and counterparty risks

  • Smart contract risk. A bug in the program could lose deposited funds. The program has not completed an external audit; treat devnet as a test environment.
  • Oracle risk. Randomness comes from ORAO. Its key holders could, in principle, withhold or foresee draws; the protocol bounds these cases (forfeiture on expiry, seeds bound after the open, the per-wager cap), and they are described on Randomness. An oracle outage longer than T_SETTLE forfeits in-flight wagers to the pool.
  • Governance risk. The program is upgradeable. See Security model for who holds which power and the delays that apply.
  • USDC issuer risk. The pool holds legacy SPL USDC. The issuer can freeze token accounts, including the pool’s own; no design can route around that.
Do not deposit what you cannot afford to see fall in value over a month. Providing liquidity to a prize-linked payout pool may also be regulated where you live.