Accounting & Loss Treatment

Risk & Proof — Step 3 of 4

This section describes how accounting and loss treatment are handled within AlphaPing-operated, non-custodial on-chain credit vaults.

Accounting reflects realized outcomes as recorded on-chain and determined by protocol execution. Gains, losses, liquidations, and transfers are recognized based on blockchain state and smart contract behavior, without discretionary adjustment, smoothing, or off-chain reconciliation.

This treatment applies uniformly across all AlphaPing-operated vaults and is independent of vault classification, mandate configuration, or market conditions.

Accounting Source of Truth

The authoritative source of accounting for AlphaPing-operated vaults is on-chain state as determined by smart contract execution and blockchain records.

Positions, balances, transfers, liquidations, fees, and realized outcomes are reflected based on protocol logic and confirmed transactions on the underlying blockchain. AlphaPing does not maintain a separate off-chain ledger, shadow accounting system, or discretionary adjustment layer.

Any interfaces, dashboards, or reports provided by AlphaPing are representations of on-chain data and are intended for convenience only. In the event of any discrepancy, on-chain records and protocol-defined state are controlling.

Recognition of Gains and Losses

Gains and losses within AlphaPing-operated vaults are recognized when they are realized through protocol execution and recorded on-chain.

Recognition occurs as a result of concrete on-chain events, including interest accrual, liquidation execution, asset transfers, or settlement of positions according to protocol rules. Unrealized price movements, indicative valuations, or projected outcomes are not treated as realized gains or losses until reflected by confirmed on-chain state.

AlphaPing does not accelerate, defer, or otherwise adjust the timing of gain or loss recognition. Accounting follows protocol-defined mechanics and blockchain confirmation, irrespective of market conditions or expectations.

Loss Realization and Allocation

Losses within AlphaPing-operated vaults are realized through protocol-defined mechanisms and are allocated to vault participants according to their proportional exposure.

Loss realization may occur as a result of liquidation events, adverse execution during liquidation, protocol-level outcomes, or other on-chain events defined by the underlying smart contracts. Losses are reflected directly in on-chain balances and vault accounting once execution is confirmed on the blockchain.

AlphaPing does not absorb, redistribute, defer, or offset losses. There is no discretionary allocation of losses between participants, no loss smoothing, and no internal compensation mechanism. All loss allocation follows protocol rules and on-chain state.

No Smoothing, No Discretion

AlphaPing does not apply discretionary judgment, smoothing mechanisms, or off-chain adjustments to accounting outcomes.

There is no manual intervention to delay, accelerate, modify, or reallocate gains or losses. AlphaPing does not apply discretionary pricing, valuation overlays, or post-hoc adjustments intended to influence reported outcomes.

All accounting reflects protocol execution and on-chain state as it occurs. Where outcomes are unfavorable, they are reflected as such without mitigation, deferral, or discretionary modification.

Protocol-Dependent Outcomes

Accounting outcomes within AlphaPing-operated vaults are dependent on the behavior and execution of third-party protocols and their underlying smart contracts.

Interest accrual, liquidations, settlement timing, fees, and loss realization are governed by protocol logic, parameter configuration, and on-chain conditions. AlphaPing does not control protocol governance, smart contract execution, emergency mechanisms, or protocol-level interventions.

Audits, documentation, or assurances provided by third-party protocols do not constitute guarantees of outcome. Accounting reflects actual protocol execution as recorded on-chain, regardless of expectations, assumptions, or prior behavior.

Timing, Delays, and Settlement Effects

Accounting outcomes are recorded when transactions are executed and confirmed on-chain. The timing of recognition may be affected by blockchain conditions, including network congestion, transaction ordering, confirmation delays, or protocol-specific settlement mechanics.

During periods of high activity or stress, execution and confirmation may occur later than anticipated. Such delays may impact the timing of interest accrual, liquidation execution, transfers, or settlement of positions. Accounting reflects the point in time at which on-chain execution is finalized, not when an action is initiated or expected.

AlphaPing does not guarantee execution timing, confirmation speed, or priority inclusion. There is no off-chain adjustment or retroactive modification of accounting to account for network or settlement delays.

What This Does Not Do

The accounting and loss treatment described here does not eliminate risk or ensure favorable outcomes.

Specifically, it does not:

Accounting reflects realized on-chain outcomes as they occur, without modification or discretionary intervention.

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