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Terms of Service

Last Updated: May 26, 2026 Version: 1.0

These Terms of Service (the "Terms") govern your access to and use of the wavs-defi interface (the "Interface"), the smart contracts that power it (the "Smart Contracts"), and any vault deployed under those Smart Contracts (each, a "Vault"), each operated by Layer Labs (Cayman) Ltd. (the "Operator", "we", "us", or "our"). The Interface, the Smart Contracts, and the Vault are referred to collectively as the "Service".

By accessing the Interface, connecting a wallet, or depositing assets into any Vault, you ("you" or the "User") agree to be bound by these Terms. If you do not agree, do not use the Service.

1. Eligibility

You represent and warrant that:

  • You are at least 18 years old, or the legal age of majority in your jurisdiction (whichever is greater);
  • You are not a person or entity named on any sanctions list maintained by the U.S. Office of Foreign Assets Control ("OFAC"), the United Nations Security Council, the European Union, His Majesty's Treasury, or any other applicable sanctions authority;
  • You are not a resident of, located in, organized under the laws of, or accessing the Interface from Cuba, Iran, North Korea, Syria, the Crimea, Donetsk, Luhansk, Kherson, or Zaporizhzhia regions of Ukraine, Russia, Belarus, or Myanmar (the "Prohibited Jurisdictions");
  • You will not use a virtual private network, proxy, or any other method to circumvent any geographic restriction or to misrepresent your location;
  • Your access to and use of the Service complies with all laws and regulations applicable to you.

If any of the above ceases to be true, you must immediately stop using the Service.

2. What the Vault Does

The Vault is an ERC-4626 smart contract deployed on the Base network that accepts USDC deposits and deploys them in a delta-neutral strategy:

  • Approximately 71% of deposited capital provides concentrated liquidity to a WETH/USDC pool on Aerodrome Finance, earning swap fees and AERO emissions;
  • Approximately 29% is posted as collateral on Aave V3 to open and maintain a short WETH position that offsets the LP's net long ETH exposure;
  • Rebalancing is initiated by an off-chain operator network running WAVS (WebAssembly Actively Validated Service) components. Operators do not custody User funds at any time; they only call permissioned functions on the Smart Contracts.

The strategy targets yield with reduced exposure to ETH price movement. The Vault is not guaranteed to achieve any particular yield, and may lose value, including losing all User deposits.

3. Assumption of Risk

Please read this section carefully. Cryptocurrencies and decentralized finance protocols are experimental, speculative, and inherently risky. You acknowledge and accept each of the following risks. By using the Service you agree that the realization of any of these risks may result in the total and absolute loss of your assets.

3.1 Smart contract risk

The Smart Contracts may contain bugs, errors, design flaws, economic vulnerabilities, or security vulnerabilities, whether or not discoverable through code review. Smart contracts execute autonomously and irrevocably; once a transaction is mined it cannot be undone. Funds lost through smart contract failure cannot generally be recovered.

3.2 Closed-source code

The source code of the Smart Contracts is not publicly available. You cannot independently inspect, audit, or verify the Smart Contracts' source. Only the compiled bytecode is observable on-chain. You accept the Smart Contracts on the basis of the Operator's representations in this document and the limited reviews described in §3.3, and not on the basis of independent source-level review by you or third parties.

3.3 Limited audits

The Smart Contracts have not been audited by a third-party human security firm. The Operator has performed automated static analysis and AI-assisted code review only. AI-assisted review does not constitute, and is not a substitute for, a professional human security audit. You should treat the Vault as experimental and should not deposit assets you cannot afford to lose.

3.4 Strategy risk

Delta-neutral strategies are not delta-zero. Realized basis between the spot liquidity position and the perpetual short can drift; impermanent loss may outpace fees and emissions; AERO emissions may decline; funding rates on the short leg may turn against the Vault; and gamma exposure may produce losses during volatile markets. The Vault's allocation between LP and hedge is approximate and may change over time.

3.5 Liquidation risk

The Vault's Aave V3 short position is collateralized by USDC and borrows WETH. If WETH appreciates faster than the Vault can rebalance, if the Aave oracle prints a stressed price, or if liquidity on the unwind path is insufficient, the position may be partially or fully liquidated. Liquidations may permanently reduce Vault assets, including the Vault's share of User capital.

3.6 Oracle risk

The Vault and its underlying protocols rely on price oracles, including Chainlink, the Aerodrome on-chain pool state, and Aave's internal price feeds. Oracle latency, manipulation, freezing, or feed failure can cause incorrect pricing, faulty rebalancing, unfair liquidations, or loss of User assets.

3.7 Base network and sequencer risk

The Base network is an Ethereum Layer 2 with a sequencer operated by a centralized party. Sequencer downtime, censorship, transaction reordering, or extraction may prevent timely deposits, withdrawals, or rebalances, and may expose the Vault to adverse price moves.

3.8 Third-party protocol risk

The Vault depends on external protocols including Aerodrome Finance, Aave V3, the Base network, and USDC (issued by Circle Internet Financial). Any failure, exploit, governance change, parameter change, fork, upgrade, or pause of these protocols may cascade to the Vault and affect User assets.

3.9 Stablecoin and depeg risk

The Vault is denominated in USDC. USDC may lose its peg to the U.S. dollar temporarily or permanently, including as a result of issuer insolvency, regulatory action, banking-system disruption, or smart contract failure. A USDC depeg will directly reduce the value of Vault deposits.

3.10 WAVS operator risk

Rebalances are initiated by an off-chain WAVS operator network. The operator quorum may fail to be reached; operators may sign incorrect or malicious payloads; the WAVS service may be paused, slowed, or compromised; and the operator set itself may be reconfigured by the Operator. Any of these may prevent timely rebalancing and increase risk to Vault assets.

3.11 Regulatory risk

Laws and regulations governing digital assets, yield-bearing instruments, and decentralized finance are evolving rapidly and vary by jurisdiction. New regulations or interpretations may render the Service illegal, taxable, or inaccessible in your jurisdiction without notice, and may affect the value of your Vault deposit.

3.12 Tax risk

Use of the Vault may have tax consequences depending on your jurisdiction and personal circumstances. You are solely responsible for determining, reporting, and paying any taxes that apply to your use of the Service. The Operator does not provide tax reporting and does not act as a withholding agent.

4. No Advice; No Fiduciary Relationship

Nothing in the Interface, the Vault, the Smart Contracts, or any related communication from the Operator constitutes investment, financial, legal, accounting, or tax advice, or a recommendation, solicitation, or offer to buy or sell any asset. The Operator does not owe you a fiduciary duty. You are solely responsible for your own due diligence and for any decisions you make in connection with the Service.

5. Fees

The Vault charges a performance fee on profits above the high-water mark. The current fee, the recipient, and the high-water-mark mechanic are disclosed in the Interface at the time of deposit and are queryable on-chain via the Smart Contracts' getPerformanceFeeConfig() view. The Operator reserves the right to change the fee prospectively. Fee changes do not apply retroactively to gains accrued before the change.

6. Prohibited Conduct

You agree not to:

  • Use the Service if you are not eligible under §1;
  • Attempt to exploit, manipulate, or extract value from the Vault through methods including but not limited to oracle manipulation, MEV extraction targeting Vault transactions, front-running or back-running WAVS rebalances, or sandwiching User deposits and withdrawals;
  • Use the Service for money laundering, terrorism financing, sanctions evasion, or any other unlawful purpose;
  • Reverse-engineer, decompile, or attempt to derive the source code of the Smart Contracts or the Interface beyond what is permitted by applicable law;
  • Circumvent any technical, contractual, or geographic restriction on use of the Service.

The Operator reserves the right to block addresses suspected of prohibited conduct from interacting with the Interface. This is an Interface-level block only — the Smart Contracts remain accessible directly on-chain, subject to their own conditions.

7. Intellectual Property

The Interface, including its source code, design, copy, branding, and the Smart Contracts (in both source and compiled form), is the exclusive property of the Operator. You are granted a limited, non-exclusive, non-transferable, revocable license to use the Interface solely for your personal, non-commercial use of the Vault as contemplated by these Terms.

8. Disclaimer of Warranties

THE SERVICE — INCLUDING THE INTERFACE, THE SMART CONTRACTS, AND THE VAULT — IS PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE OPERATOR AND ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS (THE "OPERATOR PARTIES") DISCLAIM ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, AND ANY WARRANTIES ARISING OUT OF COURSE OF DEALING OR USAGE OF TRADE.

THE OPERATOR PARTIES MAKE NO WARRANTY THAT THE SMART CONTRACTS ARE FREE FROM DEFECTS, BUGS, OR VULNERABILITIES; THAT THE INTERFACE WILL BE AVAILABLE WITHOUT INTERRUPTION OR ERROR; OR THAT THE VAULT WILL ACHIEVE ANY PARTICULAR YIELD OR RETURN.

9. Limitation of Liability

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT WILL THE OPERATOR PARTIES BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS, LOST DATA, LOST OPPORTUNITY, OR LOSS OF GOODWILL, ARISING OUT OF OR IN CONNECTION WITH THESE TERMS OR YOUR USE OF THE SERVICE, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, OR ANY OTHER THEORY, AND WHETHER OR NOT THE OPERATOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

THE OPERATOR PARTIES' AGGREGATE LIABILITY TO YOU FOR ALL CLAIMS ARISING OUT OF OR RELATED TO THESE TERMS OR THE SERVICE SHALL NOT EXCEED ONE HUNDRED U.S. DOLLARS (USD $100.00).

Some jurisdictions do not allow the exclusion or limitation of certain warranties or damages, so some of the above may not apply to you.

10. Release and Indemnification

Release. YOU EXPRESSLY ASSUME ALL RISKS ASSOCIATED WITH YOUR ACCESS TO AND USE OF THE SERVICE, AND HEREBY RELEASE THE OPERATOR PARTIES FROM ANY AND ALL LIABILITY, CLAIMS, CAUSES OF ACTION, OR DAMAGES, KNOWN OR UNKNOWN, ARISING FROM OR RELATING TO SUCH ACCESS AND USE.

Indemnification. You agree to indemnify, defend, and hold harmless the Operator Parties from and against any claim, loss, liability, damage, cost, or expense (including reasonable attorneys' fees) arising out of or related to: (a) your breach of these Terms; (b) your violation of any law, regulation, or third-party right; (c) your misuse of the Service; or (d) your negligence, willful misconduct, or fraud.

11. Modifications; Suspension; Termination

The Operator may modify these Terms at any time. When we do, we will update the version number and the "Last Updated" date above. Material changes will also re-trigger the acceptance flow on the Interface. Your continued use of the Service after a modification constitutes acceptance of the modified Terms.

The Operator may, at any time and for any reason, with or without notice, suspend or discontinue the Interface, restrict access to it, modify Vault parameters, deploy upgrades to the Smart Contracts (subject to their on-chain governance), or pause deposits.

Suspension or discontinuation of the Interface does not affect your ability to interact directly with the Smart Contracts on-chain, including your ability to withdraw assets, subject to the Smart Contracts' own conditions and limitations.

12. Dispute Resolution; Arbitration; Class Action Waiver

Please read this section carefully — it affects your legal rights.

12.1 Informal resolution

Before bringing any formal dispute against the Operator, you agree to first attempt to resolve the dispute informally by sending written notice describing the dispute to legal@layer.xyz and allowing the Operator sixty (60) days to respond and engage in good-faith negotiation.

12.2 Binding arbitration

Any dispute, claim, or controversy arising out of or relating to these Terms or the Service that cannot be resolved informally shall be resolved exclusively by binding arbitration administered by the International Centre for Dispute Resolution ("ICDR") under its International Arbitration Rules then in effect. The seat of arbitration shall be George Town, Cayman Islands. The arbitration shall be conducted by a single arbitrator in the English language. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction.

12.3 Class action waiver

YOU AND THE OPERATOR EACH WAIVE THE RIGHT TO A TRIAL BY JURY AND THE RIGHT TO PARTICIPATE AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS ACTION, COLLECTIVE ACTION, OR REPRESENTATIVE PROCEEDING. CLAIMS MAY BE BROUGHT ONLY ON AN INDIVIDUAL BASIS. THE ARBITRATOR MAY NOT CONSOLIDATE CLAIMS OF MORE THAN ONE PERSON AND MAY NOT PRESIDE OVER ANY CONSOLIDATED, REPRESENTATIVE, OR CLASS PROCEEDING.

12.4 Opt-out

You may opt out of the arbitration and class-action-waiver provisions of this §12 by sending written notice to legal@layer.xyz within thirty (30) days of first accepting these Terms. Opting out does not affect any other provision of these Terms.

12.5 Injunctive relief

Notwithstanding the foregoing, either party may seek injunctive or other equitable relief in a court of competent jurisdiction to protect intellectual property rights or to prevent imminent and irreparable harm pending the outcome of arbitration.

13. Governing Law

These Terms shall be governed by and construed in accordance with the laws of the Cayman Islands, without regard to its conflict-of-laws principles. Subject to §12, the courts of the Cayman Islands shall have exclusive jurisdiction over any matter not subject to arbitration.

14. Miscellaneous

  • Entire agreement. These Terms constitute the entire agreement between you and the Operator regarding the Service and supersede all prior or contemporaneous understandings.
  • Severability. If any provision of these Terms is held unenforceable, the remaining provisions remain in full force and effect, and the unenforceable provision shall be modified to the minimum extent necessary to make it enforceable while preserving its intent.
  • No waiver. A failure to enforce any right or provision under these Terms is not a waiver of that right or provision.
  • Assignment. You may not assign or transfer these Terms or any rights or obligations under them without the Operator's prior written consent. The Operator may assign or transfer these Terms to a successor in interest or affiliate without notice.
  • Headings. Section headings are for convenience only and do not affect interpretation.
  • Electronic communications. You consent to receive communications from the Operator electronically. Notices, disclosures, and other communications we provide electronically satisfy any legal requirement that such communications be in writing.
  • Force majeure. The Operator is not liable for any failure or delay caused by events beyond its reasonable control, including network outages, blockchain forks, regulatory action, or acts of God.
  • Contact. For questions about these Terms, contact us at legal@layer.xyz.

By depositing into any Vault, you confirm that you have read, understood, and agree to be bound by these Terms.