Risk Disclosure
Please read this disclosure carefully before earning or holding pUSD.
pUSD is NOT a Stablecoin
pUSD is an algorithmic reward asset, not a traditional stablecoin like USDC or USDT. It does not maintain a 1:1 peg to the US Dollar. Its redemption value is dynamic and depends on treasury health and redemption behavior.
1. Redemption Value Risk
The value you receive when redeeming pUSD for USDT is calculated as:Solvency Pool USDT ÷ pUSD Opting to Redeem. This means:
- If many users redeem simultaneously, per-pUSD value decreases
- If treasury growth slows, redemption value may be lower than expected
- Redemption value can be less than $1.00 per pUSD
- Redemption value can potentially exceed $1.00 if treasury grows faster than redemptions
2. Liquidity Risk
pUSD has specific liquidity constraints:
- 3-Month Cliff: pUSD cannot be redeemed for USDT until 3 months after it was minted to your account
- Weekly Epochs: Redemptions are processed in weekly batches, not on-demand
- No Secondary Market: pUSD is not tradeable on external exchanges
- Unlock Schedule: Earned pUSD unlocks progressively based on activity milestones
3. Protocol Risk
pUSD's value depends on the success of Prex Markets:
- If trading volume declines, treasury inflows decrease
- If Prex Markets fails, treasury may not be sufficient for all redemptions
- Smart contract vulnerabilities could affect pUSD mechanics
- Regulatory changes could impact Platform operations
4. PREX Conversion Risk
Converting pUSD to PREX tokens (Path B) involves additional risks:
- FDV Threshold: Conversion only available when PREX reaches $1B FDV—this may never occur
- 6-Month Vesting: Converted PREX vests linearly over 6 months; you cannot sell immediately
- 30% Treasury Cap: Conversions may be suspended if they would exceed 30% of treasury
- PREX Volatility: PREX token value may fluctuate significantly during your vesting period
5. Trading Risk
While pUSD provides LossLess protection, trading on Prex Markets still involves risk:
- You can lose your deposited funds (USDT/USDC) through trading
- LossLess only rebates 10% of losses, and has caps (100 pUSD per event, 1,000/month, 10,000 lifetime)
- Market outcomes are uncertain and you may be wrong
- Past performance does not guarantee future results
6. Zero Cost Basis ≠ Zero Risk
While pUSD has a zero cost basis (you earn it, not buy it), you still face:
- Opportunity Cost: Time and activity spent earning pUSD could be spent elsewhere
- Tax Implications: Earned pUSD may be taxable income in your jurisdiction
- Expectations Risk: Expecting high redemption value and receiving less can feel like a loss
7. Regulatory Risk
Cryptocurrency and prediction market regulations are evolving:
- pUSD's legal classification may change
- Your jurisdiction may restrict access to Prex Markets
- Tax treatment of pUSD earnings may vary or change
- Regulatory enforcement actions could affect the Platform
8. Technical Risk
As with any blockchain-based system:
- Smart contracts may contain bugs or vulnerabilities
- Blockchain network issues could affect transactions
- Private key loss means loss of access to your assets
- Third-party wallet or service failures could impact your holdings
Your Responsibility
You are responsible for understanding these risks before participating. Only earn pUSD if you can accept the possibility of lower-than-expected redemption value. Consider consulting financial and tax advisors in your jurisdiction.