Risk Disclosures
2xSOL offers leveraged exposure to SOL at multiple tiers (2x, 3x, 5x, 10x) and carries significant risks. Higher leverage tiers carry exponentially greater risk. Please read carefully before participating.
Protocol Status (read before using)
Security and operational maturity can change quickly in DeFi.
- Audit: Not publicly audited yet / audit in progress (verify before depositing)
- Risk engine: Percolator-style accounting + solvency constraints (does not eliminate market risk)
- Oracles: Pyth (with staleness/confidence checks; see docs)
- Leverage tiers: 2x, 3x, 5x, and 10x — each with separate risk parameters and margin requirements
If you are unsure what any of the above means, do not participate.
Leverage Risk
Higher leverage tiers amplify both gains and losses proportionally
Amplified losses: When SOL declines, leveraged tokens decline at a multiple of that rate. At 2x, a 10% drop means ~20% loss. At 10x, a 10% drop means ~100% loss.
Liquidation risk by tier:
| Tier | ~Liquidation move | Risk Level |
|---|---|---|
| 2x | -50% SOL | Lower |
| 3x | -33% SOL | Moderate |
| 5x | -20% SOL | High |
| 10x | -10% SOL | Very High |
Volatile leverage: The actual leverage ratio fluctuates with market movements. During rapid price changes, leverage can temporarily exceed target ranges.
Compounding effect: Daily rebalancing means losses compound over time. Even if SOL returns to its original price, leveraged tokens may not recover fully.
Smart Contract & Technology Risks
- Smart contract bugs: Code vulnerabilities could result in partial or total loss
- Oracle failures: Price feed issues could trigger incorrect rebalances
- Network congestion: Solana network issues may prevent timely rebalancing
- Liquidation risk: Extreme market moves could force emergency liquidations, especially at higher leverage tiers
- Counterparty risk: Exposure to lending protocols and derivative platforms
Market & Liquidity Risks
- Low liquidity: During market stress, you may not be able to redeem shares immediately
- Price gaps: Large price movements between rebalances can cause tracking errors
- Funding costs: Borrowing costs for leverage can vary significantly with market conditions — higher tiers incur proportionally more
- Slippage: Large trades may move markets unfavorably, especially during rebalancing
- Market closure: Extreme conditions could halt all trading activities
Fees & Costs
Management fees: Annual fees reduce NAV over time, currently around 2% APR.
Borrowing costs: Interest on leveraged positions varies with market rates. Higher leverage = higher borrow costs.
Trading fees: Rebalancing incurs DEX fees and potential slippage costs.
Performance drag: All fees compound and can significantly impact returns over time, especially at higher leverage tiers.
Regulatory & Legal Risks
- Regulatory uncertainty: Future regulations could restrict or prohibit operations
- Tax implications: Complex tax treatment; consult a tax professional
- No guarantees: No FDIC insurance or regulatory protections
- Experimental technology: DeFi protocols are new and largely untested at scale
Learn more about leveraged ETFs and their risks:
Summary of Key Risks
- At 10x leverage, a 10% SOL drop could wipe out your entire position
- Even at 2x, you may lose 50% or more in a single day
- Losses compound over time even if SOL price recovers
- Smart contract bugs could result in total loss
- Market conditions may prevent timely redemptions
- Fees continuously reduce your investment value
- No regulatory protections or guarantees