Risks and Disclaimers
Axiom is designed to be transparent, decentralized, and economically aligned, but like all on-chain systems it carries risks.
This section is not legal advice. It is an overview of technical and operational risks inherent to any permissionless protocol.
Market Risk
Prediction markets involve uncertainty. Users may lose part or all of the assets they stake in market outcomes if their predictions are incorrect. Market outcomes are not guaranteed and depend on real world events.
Users should not trade with funds they cannot afford to lose.
Smart Contract Risk
Axiom is built on audited smart contracts, but no contract is immune to vulnerabilities.
Possible risks include:
Undiscovered bugs
Unexpected interactions between contracts
Third party attack vectors
Implementation errors
The protocol includes upgrade paths during bootstrap to address critical issues quickly, but users must acknowledge the inherent risk of interacting with smart contracts.
Oracle and Price Feed Risk
Snapshot calculations and vault TVL rely on:
BandChain oracles
On-chain XRP or USD-pegged stablecoin DEX pricing
While decentralized, these sources can experience outages or anomalies that may impact short term accuracy.
The protocol includes fallback logic and challengeable snapshots, but oracle data always introduces some degree of risk.
Governance and Voting Risk
Axiom’s resolution system relies on stakers acting honestly. While misaligned behavior is penalized, governance risk still exists.
Risks include:
Low voter turnout
Collusion attempts
Concentration of stake among a small group
Incorrect or malicious proposals
Biased interpretation of evidence
The escalation system is designed to mitigate these risks, but they cannot be entirely eliminated.
Liquidity and Participation Risk
Yield in Axiom Prime depends on:
Market volume
Trading activity
Number of resolved markets
Penalties applied to governance participants
If participation drops, yield may decrease. Vault share prices rise only when commissions and penalties flow into the system.
Users should not assume a specific yield rate.
Stablecoin and Asset Risk
When stablecoin settlement is enabled, risks may include:
Depegs
Liquidity shortages
Oracle pricing inconsistencies
Slippage during internal conversions
During bootstrap mode, only XRP is used to simplify risk exposure.
Slashing and Penalty Risk
Governance participants can lose a percentage of their stake if they:
Submit incorrect proposals
Vote incorrectly
Act dishonestly
These penalties are real and enforced through share burns. Users who participate in governance must understand the rules.
Escalation Failure Risk
In very rare cases, even escalation to all stakers may not reach quorum or consensus. If this happens, the market resolves as Invalid and all traders are refunded.
This is a designed safety valve, but it represents a potential loss of clarity on certain outcomes.
Bootstrap Mode Risk
During the initial bootstrap period:
Market creation is whitelisted
Resolution is handled by authorized signers
Certain administrative actions can occur to stabilize the system
Although heavily rate limited and fully transparent, bootstrap mode is still a form of temporary centralization. Users should be aware of this until bootstrap mode ends automatically after 12 months or is disabled earlier by a multi-signer vote.
Frontend and Infrastructure Risk
Axiom’s frontend, APIs, or infrastructure providers could experience:
Outages
Downtime
Congestion
Latency issues
Incorrect data display
Trading and governance are executed on-chain, but frontend interruptions can still impact the user experience.
Regulatory and Jurisdictional Risk
Prediction markets operate in a complex legal environment. Regulations vary by jurisdiction. Axiom does not offer legal guarantees, and users are responsible for understanding local laws applicable to them.
The protocol is permissionless, but compliance requirements may differ across regions.
User Error Risk
Users may experience losses due to:
Incorrect market interpretation
Sending assets to the wrong address
Misreading resolution evidence
Failing to claim winnings
Confusing settlement asset denominations
These risks are inherent to self-custody and decentralized systems.
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