Limitations

KEK is designed to reduce execution risk through validation, simulation, and monitoring — not to eliminate risk entirely.

This page outlines known limitations of the system, including technical constraints, market realities, and operational boundaries users should understand before deploying capital.

What this page covers

Strategy and validation limitations
Market and execution constraints
AI system considerations
User responsibility boundaries

Strategy & validation limitations

Validation improves decision quality — it does not guarantee future performance.

Past performance cannot guarantee future results

Even well-validated strategies can fail as market conditions evolve. Regulatory guidance explicitly requires disclosure that past performance does not guarantee future results.

Backtesting cannot fully reproduce live trading

Backtesting simulates strategies using historical data and is inherently limited by assumptions, data quality, and execution modeling.

Common limitations include:

Imperfect modeling of fills and execution conditions
Survivorship bias and dataset artifacts (if the data universe is incomplete)
Over-optimization risk (strategies tuned to history that fail live)

Paper trading does not replicate all real liquidity or psychology

Paper trading is simulated trading and can diverge from live results due to:

Slippage/spread/commission differences
Fill realism and latency assumptions
Different behavior when real money is at stake

Regime shifts can degrade previously effective strategies

Markets routinely change structure (trend ↔ range, volatility compression/expansion), which can invalidate assumptions embedded in historical validation. KEK detects and responds to drift, but it cannot prevent market change.

Bottom line: Validation identifies risk — it does not remove it.

Market & execution constraints

Live execution depends on external conditions beyond KEK's control.

Slippage is the difference between the expected price and the executed price, and it is more common during high volatility or when orders are large relative to available volume.

Liquidity and market impact limits

Large or concentrated positions can experience:

Reduced fill quality
Higher slippage
Increased price impact due to limited depth

Network congestion and confirmation delays

On-chain execution can be affected by blockchain congestion, leading to delayed confirmations and higher fees. This can materially alter timing-sensitive strategies.

External infrastructure dependencies

Execution layers and rails are external components. Infrastructure interruptions, degraded liquidity, or protocol constraints can cause live behavior to differ from validation assumptions.

AI system limitations

KEK uses AI agents to assist analysis and strategy generation, but AI systems have inherent constraints.

Outputs may be imperfect or incomplete

Agents can generate strategies that require:

Additional review for edge cases
Stricter constraints
Additional validation before viability is confirmed

Models are trained on historical patterns

AI systems may not anticipate novel or unprecedented market behavior. Risk management frameworks emphasize that AI risks should be managed across the lifecycle because systems can produce unintended outcomes and degrade over time.

Extreme events can exceed modeled behavior

Highly discontinuous events (liquidity vacuums, cascading liquidations, protocol shocks) can break assumptions faster than monitoring can respond.

AI assists decision-making — it does not replace it.

Operational boundaries

KEK does not:

Execute trades autonomously without user authorization
Control or custody user funds
Guarantee profitability or prevent losses
Intervene in live trades once authorized

Validation and monitoring systems can recommend refinement actions, but execution is always downstream and user-controlled.

Risk acknowledgment

By using KEK, users acknowledge:

Losses are possible, including loss of principal
Validation cannot predict future markets
DeFi introduces smart contract and protocol-level risks
Execution conditions (slippage, liquidity, congestion) can materially change outcomes

A single smart contract vulnerability can lead to irreversible loss of funds in DeFi contexts.

KEK provides tools for disciplined validation — not financial guarantees.

User responsibility boundaries

Because KEK is non-custodial and execution is permissioned:

Users are responsible for wallet security
Users must review and approve transactions
Users control when execution occurs and what risks are accepted

KEK reduces structural execution risk through discipline and transparency — but the user remains responsible for deployment decisions.

Why this page exists

Clear understanding of limitations is essential for responsible strategy deployment.

KEK is built for informed users who value validation, transparency, and control — and who understand that markets cannot be made risk-free.