naka
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docs/trading/risks

Trading Risks

NAKA's design removes some risks that are present in traditional DeFi (admin keys, upgradeability, treasury extraction) but introduces or preserves others. This page is the honest version.

Smart-Contract Risk

The contracts are immutable. A bug in the deployed bytecode cannot be patched in place. Independent audits will be linked from the contracts page when mainnet ships, but auditing is not a guarantee of bug-freeness. Sepolia is a live testbed with real interactions; review tx history and event logs before committing capital on mainnet.

Volatility

The curve is exponential. A 1 ETH buy near the start of the curve has materially different price impact than a 1 ETH buy at 80% of the cap. Look at the live chart on naka.exchange and the price-impact indicator in the swap form before trading large.

MEV and Adverse Execution

Public-mempool transactions are exposed to:

  • Front-running. A searcher buys ahead of you, your buy executes at a slightly worse price.
  • Sandwich attacks. Searcher buys ahead, then sells immediately after, capturing the difference.
  • Reordering. Multiple trades in the same block can interact unpredictably.

Mitigations baked in:

  • 2% slippage tolerance hardcoded on the frontend's swap forms.
  • Same-block anti-flip cooldown (COOLDOWN_BLOCKS) on a per-account basis.
  • 5 ETH per-buy cap limiting size of any single move.

You can further reduce MEV exposure by using a private RPC or MEV-protected wallet (Flashbots Protect, MEV Blocker, etc.).

Frontend Spoofing

Anyone can clone naka.exchange at a different domain. A malicious clone could:

  • Show fake prices to lure trades
  • Substitute a malicious router address in the connect flow
  • Capture wallet signatures

Defenses:

  • The official URL is exactly naka.exchange. Always check the address bar.
  • The contract addresses on the addresses page are canonical.
  • Run the frontend yourself. The source is open and reproducible.

Phishing

Off-platform messages claiming to be NAKA. Discord DMs offering airdrops, X accounts impersonating @naka_exchange, fake "support" forms. Are all hostile. The protocol has no DM-based support flow.

Parameter Misunderstanding

Examples of misreads:

  • "Self-deprecation pauses the protocol". No, only the buy path closes; sells continue indefinitely.
  • "The fee accrues to a treasury". No, the fee burns to 0xdEaD. There is no treasury.
  • "There's a team allocation". No, every NAKA in existence was minted through the curve at curve prices.
  • "S is in ETH". No, S = 100 is a unitless parameter inside e^(eth/S). The eth in the same formula is denominated in ETH.

If a claim about NAKA contradicts the deployed bytecode or this documentation, the bytecode is the source of truth.

Not Financial Advice

This documentation describes how the protocol works. It is not a recommendation to trade NAKA or hold NAKA. Crypto assets are high-risk and may lose all value.