Risks

Trading with leverage can lose your whole margin quickly. Only trade what you can afford to lose.

Smart contract risk

Parchment runs on Sui smart contracts. A bug in the contracts, or in the Sui network itself, could cause losses. Parchment's admin key can upgrade the contracts, change parameters within their on-chain limits, and pause. See Contract addresses.

Oracle risk

Prices come from Pyth Lazer. Fills, liquidations and settlements all use the oracle price. A wrong, stale or delayed price can fill your order at a bad price or liquidate your position. Stale prices are refused: an on-chain price older than 10 seconds cannot be used.

If a market's price feed is switched off (an oracle kill switch), closes, emergency closes and liquidations stop on that market until it is switched back on. While it is off, a position can move past its bust price without being liquidated.

One exception: the session close keeps running while the feed is off.

Payout queue delays

The pool is not required to hold enough cash to pay every winner at once. When it is short, profits wait in the payout queue until trading losses refill the pool. There is no way to exit the queue early, and there is no guaranteed date.

Market closes

Open positions can be force-closed at a snapshot price when their market closes: NVDA, TSLA, GOOGL and SPCX when their price feed's last session ends (for NVDA, Friday 8:00 PM New York time). A position past its bust price at the snapshot is liquidated instead. This runs during pauses and while the market's price feed is switched off. See Session close.

Around scheduled events, such as earnings reports, new opens can be paused, leverage capped, and stock market positions closed for you. See Scheduled events.

Pauses

Parchment can pause opens on a market or across the protocol. A pause does not stop closes, emergency closes or liquidations.

A full pause also stops payout queue harvests until it is lifted.

Keeper risk

Orders are filled by Parchment's keeper. If it is down, unfilled opens expire and are refunded, and you can emergency close a position once 15 seconds have passed since the close request and an oracle price has been published after that point.

The contract accepts any signed price inside an order's 1-second fill window. Filling on the first one is the keeper's policy, not an on-chain rule.

The trigger service, the gas sponsor, the public API and the app run off chain. They make trading easier but are not part of the contracts' guarantees. Stop loss and take profit triggers rely on the trigger service, are best effort, and can fill worse than your trigger price.

PARCHMENT

PARCHMENT has no guaranteed value and cannot be redeemed for USDC. Mints can be scaled down by the daily cap, and new mints are locked and vest over time. While a mint is still locked, Parchment's admin can void it, burning it without an on-chain proof.