Risk & Safety
3 min read
Understanding what can go wrong — and how Raven is designed to protect against it.
Risks for Traders
Market Risk
Your primary risk is that the option expires OTM and your stake is lost. This is the intended behavior of the instrument. There is no additional downside beyond your stake — no liquidation, no margin call, no funding cost accruing against you.
Gamma Risk
Digital options exhibit very high sensitivity to small price moves near the strike close to expiry — a property known as gamma risk. If the settlement price is very close to your strike, the outcome can flip on a fraction of a percent. Avoid oversizing positions in near-ATM options in the final hour before a Daily contract closes.
Oracle Risk
Settlement depends on the Chainlink oracle. While Chainlink is manipulation-resistant and aggregates from many sources, extreme market conditions could theoretically produce anomalous prices. In oracle failure scenarios, all stakes are returned.
Smart Contract Risk
As with all DeFi protocols, Raven's contracts carry inherent risk. The protocol is audited, but no audit guarantees the complete absence of vulnerabilities. Do not trade with funds you cannot afford to lose.
Canton Network Risk
Raven runs on Canton Network. Node failures, network outages, or Canton protocol-level issues could temporarily prevent trading or settlement. The oracle error fallback ensures stakes are not permanently locked in infrastructure failure scenarios.
Protocol Safety Mechanisms
- Open interest caps per strike and expiry — prevents pool insolvency from concentrated one-sided positions.
- Closing Soon freeze window — trading stops before settlement, preventing last-moment manipulation.
- Oracle freshness check — stale Chainlink prices are rejected; settlement requires a valid, fresh reading.
- Oracle error fallback — all stakes returned in full if settlement cannot be confirmed.
- Protocol-seeded pool — no LP withdrawal dynamics or bank-run risk. Pool capital is managed by the protocol.
Best Practices
- Size each trade as a small percentage of your total portfolio.
- Diversify across cadences and expiry dates rather than concentrating in a single contract.
- Check the OI skew in the chain before entering — crowded sides are already priced less favorably by the AMM.
- Be careful with ATM options near the Closing Soon window — gamma is highest and outcomes least predictable.
- Use the early exit feature if conditions move against you. Recovering partial CC is better than holding to zero.