Risks and Limitations

Signa is designed to be transparent about what it can and cannot guarantee. This page describes the real risks involved in using the protocol — as a participant, as a creator, and as someone relying on the resolution system to work.

This is not legal disclaimers. It is an honest account of where things can go wrong.

Participation risk

When you take a position in a market, your net position enters the pool. If your chosen outcome does not win, that capital is distributed to the winning side. There is no partial recovery for a losing position.

Entry fees are deducted at the time of participation and are not returned regardless of outcome. This includes void scenarios: if a market is voided, you receive your net position back, but not the entry fee that was already distributed.

In short: every position carries the risk of loss, and a portion of every position is non-recoverable from the moment it is placed.

Resolution risk

Most markets resolve cleanly through the settlement phase. But not all of them do.

When a market is disputed, resolution is delayed while the dispute and arbitration process runs. During that time, your position is locked in the market and cannot be claimed. The duration of this delay depends on the dispute window and, if escalated, the arbitration window.

In rare cases, arbitration does not produce a valid outcome. When this happens, the market is voided and participants receive refunds of their net positions. This is the protocol's final safeguard — but it means participants in those markets do not receive the payout they were expecting, even if their prediction was correct.

Creator risk

Creators have two forms of capital at stake: their seed funds and their potential earnings.

Seed funds are deposited into every outcome pool at market creation. They are not a fee — they are a real position in the market. If the outcome you seeded does not win, those funds are part of what the winning side claims.

Creator earnings accumulate throughout the market's participation phase but remain locked until settlement. If you miss the settlement deadline, those earnings are forfeited entirely. There is no grace period and no appeal process for a missed deadline.

Market quality risk

The protocol allows any wallet to create a market. It does not review market quality before publication.

This means some markets may have ambiguous questions, overlapping outcomes, poorly written rules, or other structural problems that make clean resolution difficult. Participating in a poorly designed market carries higher risk of a disputed result, arbitration, or a void outcome.

Before entering a position, participants should read the question, outcomes, and rules carefully. The quality of those elements is the creator's responsibility — but the decision to participate is the participant's.

Smart contract risk

Signa runs on blockchain smart contracts. This means the protocol inherits the risks of the underlying chain and the contract code itself.

Smart contracts are immutable once deployed and interact with real funds. While the protocol is designed with safeguards against common failure modes, no contract system is entirely risk-free. Users should understand that blockchain-based systems operate differently from traditional platforms: there is no customer support that can reverse a transaction, and funds held in a contract are subject to the behavior of that contract's code.

What Signa does not guarantee

To be direct about scope:

• Signa does not guarantee that any market will attract participation.
• Signa does not guarantee that every market will resolve without dispute.
• Signa does not guarantee that real-world events will be verifiable in a way that allows clean settlement.
• Signa does not guarantee that arbitration will always produce a clear result.

What the protocol does guarantee structurally: if a clean outcome cannot be determined, funds are returned rather than arbitrarily assigned. Void is the fallback, not a forced result.