Risk Disclosure

You can lose the margin

If the price moves against the hedge, its margin shrinks. When it runs out, the venue closes the position (a liquidation) and the margin is gone. That can happen fast in a sharp move.

On Veranta, a position is liquidated when its losses and fees reach 85% of its margin. Your plan page shows this as “margin used”, where 100% is liquidation. Locke's keeper adds margin from your vault's buffer when it reaches 60% (by then losses and fees have taken about three quarters of the margin), but only while there is buffer left, the plan's limit has room and the market is open.

Higher leverage needs less money up front and puts liquidation closer. Locke caps leverage at 3x, and lower is safer.

Stock plans

A stock plan sells a perpetual future on Veranta that follows a stock or index price. It is a contract on the price only: it is not a share, carries no voting or dividend rights, and Locke never buys, sells or holds stocks for you. Veranta's stock markets follow US trading hours. While they are closed, Locke's keeper cannot add margin, and prices can open far from where they closed after a weekend, a holiday or company news, which can use up the margin before the keeper can act. Stock plans therefore start with a larger buffer, but that is a default, not a guarantee: no buffer covers every gap. You also can't close the hedge until the market reopens. Where Locke shows tokenized stocks from your account on Base, it only reads them to size the plan; whether you may hold them is a matter between you and their issuer. Stock plans aren't available to US persons, and Locke isn't affiliated with Coinbase or the companies behind the stocks.

A hedge is not a perfect match

• Fuel and crude: pump prices follow crude only in part, and with a delay; taxes, subsidies, margins, transport and exchange rates move on their own. A crude hedge can gain while your fuel bill still rises, or the other way round.
• Currency: hedges settle in US dollars (USDC on Base). If your costs are in another currency, exchange-rate moves change what the protection is worth to you.
• Holdings: a short hedge gives up gains: if the price rises, the hedge loses about what your holdings gain.

Holding costs

Perpetual futures charge or pay funding, and some markets charge a borrow fee. Rates change every hour and can turn against you; over months they can add up to a meaningful cost. Opening and closing also pay trading fees and spreads, and Locke's fee where one applies.

Markets close and roll

Crypto markets trade around the clock, but oil markets close at night and at weekends, and stock markets follow US trading hours (closed overnight, at weekends and on US holidays). While a market is closed, nobody can add margin, resize or close the hedge, and prices can gap when it reopens. Oil hedges on Veranta follow a futures contract that is rolled each month: the entry price shifts at the roll and trading pauses briefly.

Venue and counterparty risk

• Veranta is an independent platform. It can change its rules, fees, margin levels or markets, pause trading, delist a market, or fail. Veranta pays winning positions from a liquidity vault, and its contracts can be upgraded by its operators.
• Venues depend on price oracles. A wrong or late price can cause a liquidation or a bad fill.

Smart contract and software risk

Locke's vault contracts are tested extensively but not yet audited by an outside firm, and launch with deposit limits. Locke's servers, the venues' software and wallets can all have bugs or outages. Monitoring and automatic top-ups are best effort: they can be late or not happen at all.

Deposits and networks

Moving money takes time: a transaction on Base usually confirms in seconds, but network congestion can delay a deposit, a top-up or a close when it matters most. Blockchain transactions are final.

Your wallet

Anyone who controls your wallet controls your plans and your money. Keep it and its recovery phrase safe; Locke can't recover them.

Law and tax

Derivatives are regulated differently from country to country, and in some places using them may be restricted for you or your business. Hedges can have tax and accounting consequences. Check both before you use Locke.

Not advice

Locke's numbers, scenarios and labels are estimates from your inputs and market data, not advice or a promise of any outcome. If you're unsure whether hedging suits your business, talk to a qualified adviser.