(a) Problem the project solves

Most trading is directional. When you go long HYPE, you're not just betting on HYPE - you're betting on the market. If it dumps 20%, your thesis doesn't matter.

Pair and basket trading fixes this. Long HYPE, short ETH: your P&L depends on whether HYPE outperforms ETH, not on whether the market goes up. Extend that to a basket - multiple longs vs multiple shorts - and you can express complex, market-neutral strategies with precise weighting across correlated assets.

The problem is that doing this is operationally broken. Multiple positions opened separately. No combined P&L. No way to set a stop-loss on the relationship between assets. Funding on both sides tracked manually. Beta drift you don't notice until it's too late.

Pear rebuilds the infrastructure around the pair and basket as the unit of trade. One action to open both legs simultaneously. One dashboard for the combined position. Order tools - TP/SL, TWAP, ladders - built around the spread, not the individual legs. AI-assisted signal discovery. Managed vaults for passive exposure. And multiple frontends serving retail traders and institutional desks trading across Hyperliquid, Binance, Bybit, and OKX, and developers integrating via API.

(b) Operational priorities

Pear funds ongoing development and operations from protocol revenue, which accrues to the DAO. Revenue comes from three sources: frontend trading fees, API integration revenue, and performance fees on Vaults. By an on-chain governance mandate (enshrined via Snapshot vote), revenue is split 70% to $PEAR buybacks and 30% to operations. Development is carried out by a UK development company (155 Labs) engaged by the Pear Foundation (Cayman) under a grant agreement; the DevCo settles fiat vendor costs (infrastructure, tooling) while other expenses are paid in USDC on-chain. Alongside recurring revenue, the DAO/Foundation holds a treasury of ≈$3.68M as a development runway. As revenue and Vault TVL scale, the 30% operational allocation scales with them, making ongoing development increasingly self-funding.

(c) High-level project overview

Pear Protocol is an order & execution management system (OEMS) that makes the pair and the basket the unit of trade. A user expresses a relative view — e.g. long HYPE / short ETH, or a multi-leg basket of longs versus shorts — and Pear opens, manages, and closes the combined position in a single flow: one action to open both legs, one dashboard, combined P&L, a stop-loss on the spread (not the individual legs), advanced order types (TP/SL, TWAP, ladders), funding tracked across legs, and beta-neutral auto-rebalancing. Trades execute non-custodially on the user's own accounts at the underlying venues — currently Hyperliquid and symm.io (Lighter and Variational next), with connectivity to major CEXs/DEXs (Binance, Bybit, OKX, Lighter) via Pear Pro. The suite spans Pear v2.1 (live), Pear Pro (institutional), Agent Pear (a Telegram + web AI agent for natural-language wallet creation, charting and execution), a public API, and upcoming Vaults (HyperEVM) and a Base mini-app. The protocol is governed by a DAO, to which all revenues accrue.

(d) Primary token functions

$PEAR has three primary functions:

1. Value accrual (buyback) — 70% of protocol revenue is used to buy $PEAR on the open market (a mandate enshrined by governance vote); acquired tokens are held, not re-sold.

2.Staking — holders can stake $PEAR to receive stPEAR and benefit from trading fee discounts of up to -40%.

1. Governance — $PEAR holders govern the protocol and DAO via Snapshot, with voting weight proportional to token ownership; major decisions (including the revenue split) are decided by governance.

Additional utility is planned around Vaults (e.g. potential gated / priority deposit caps for stakers).

(e) Control surface reliance

The end-state is token-holder governance via the DAO. Two entities support the protocol: a memberless and founderless Cayman Foundation (Pear Foundation), and a UK development company (155 Labs) engaged by the Foundation under a grant agreement to provide software development. The Protocol is governed by the DAO — all revenues accrue to it, and major decisions (including the revenue split) go through DAO governance on Snapshot, with influence proportional to $PEAR ownership. The anticipated evolution is progressive decentralisation: continuing to migrate operational and protocol control to the token-holder DAO, with the Foundation and DevCo serving the DAO rather than directing it.

Labs / DevCo

Foundation

DAO / Onchain Governance

(a) IP ownership & control

By the terms of the executed Grant Agreement between the Pear Foundation and the development company (155 Labs Ltd), the Protocol's IP is committed to the community rather than held exclusively by any private party:

All Deliverables produced for the Protocol are committed to be made available to the Protocol's network and community under an open-source licence (Grant Agreement §5.1), freely usable and implementable by any person. The development company holds no exclusive Intellectual Property Rights in the Protocol and may not acquire or assert any (§5.2).

The Foundation (for the community/DAO) holds a perpetual, irrevocable, worldwide, royalty-free licence to any pre-existing IP the development company incorporates into the Deliverables (§5.3).

All protocol revenue accrues to the DAO and its token-holders. The team is operationalising the open-source publication of the repositories under the applicable licence and formalising the Protocol's IP position with the DAO.

(b) Contract/admin powers

Governance: signalled via Snapshot — method of authority is token-weighted majority, voting power proportional to $PEAR ownership; the 70/30 revenue split is enshrined by Snapshot vote.

Treasury: controlled by the DAO and custodied in a Fireblocks 3-of-6 multisig (MPC).

Governance execution: performed through the same 3-of-6 Fireblocks multisig. Staking contracts: upgradeable, but only subject to 3-of-6 multisig approval — no unilateral upgrade authority.

Vesting contract (Arbitrum): governed by a comptroller (admin) role with privileged functions (issue/adjust/cancel vesting plans, change recipient, transfer comptroller).

Method of authority: on-chain admin actions (upgrades, treasury moves, execution) require 3-of-6 multisig; protocol governance decisions are by token-weighted majority on Snapshot.

(c) Locked-token rights (conditional)

A staking mechanism exists: holders can stake $PEAR to receive stPEAR. stPEAR carries the same voting rights as $PEAR — staking does not change governance weight. Additional staking utility — e.g. gated / priority deposit caps in Vaults — is planned but not yet live.

(d) Value accrual & holder rights

All revenue accrues to the DAO; governance sets the split (currently 70% buyback / 30% ops, enshrined by Snapshot vote); the DAO controls the treasury via a pledge agreement; value accrues to holders primarily via the 70% buyback; holders vote on major decisions but don't direct day-to-day ops (executed by the DevCo under the grant agreement).

(e) Dissolution authority

Dissolution/wind-up operates at two levels:

1. DAO / protocol: a decision to wind up would be made by token-holder governance via Snapshot (token-weighted vote)

2. Legal wrapper (Pear Foundation): as a Cayman Islands Foundation Company, it would be wound up in accordance with the Cayman Islands Foundation Companies Act and its constitutional documents, with the wind-up executed by the Nominee Director & Supervisor (Otonom Ltd.).

(a) Entity

Pear Foundation — a Cayman Islands Web 3.0 Foundation (Foundation Company), incorporated in the Cayman Islands (Company No. CP-407589, registered 26 February 2024).

(b) IP ownership & control

Under the executed Grant Agreement with the development company (155 Labs Ltd), the Foundation secures the community's rights to the Protocol IP rather than holding it exclusively:

The Deliverables developed for the Protocol are committed to be made available to the community under an open-source licence (§5.1). The development company holds no exclusive IP rights in the Protocol (§5.2). The Foundation holds a perpetual, irrevocable, worldwide, royalty-free licence to any pre-existing IP incorporated into the Deliverables (§5.3), and engages the developer on a non-exclusive basis (it may engage others). The development company retains its own pre-existing IP and branding. All protocol revenue accrues to the DAO/token-holders. The Foundation has no subsidiary entities; the development company is a separate, independent UK company engaged under the Grant Agreement. The team is operationalising open-source publication of the repositories.

(c) Powers over DAO, treasury, protocol-controlled resources, and token administration

Control sits with $PEAR token-holders through the DAO; the Foundation gives legal effect to their decisions rather than exercising discretion above them.

DAO governance — decided by token-holders via Snapshot; method: token-weighted majority.

Treasury — controlled by the DAO via a pledge agreement, custodied in a Fireblocks 3-of-6 multisig (MPC); any treasury action requires 3-of-6 approval.

Protocol-controlled resources (revenue) — all protocol revenue accrues to the DAO; the split (currently 70% buyback / 30% operations) is set by Snapshot vote and amendable by governance.

Token administration / reward parameters — governed by Snapshot (token-weighted majority) and executed on-chain through the 3-of-6 multisig.

(d) Powers over DevCo

The Foundation directs development through a milestone-based Grant Agreement with 155 Labs Ltd — it funds and scopes the work (up to $800k across four quarterly milestones, each released only on verified KPI achievement), giving the DAO/Foundation meaningful leverage over development priorities and continuation. The engagement is non-exclusive (the Foundation may engage other developers) and the parties are independent contractors. The Foundation holds no ownership, shares, or board control of the DevCo, which is an independent UK company (sole director: Atish). For transparency, there is personnel overlap: Atish serves as both the DevCo's Director and a Core Contributor/Controller of the Foundation.

(e) Contract/admin powers

No single party can act unilaterally over the protocol:

Governance execution, treasury movements, and contract upgrades are performed through a Fireblocks 3-of-6 multisig (MPC) — threshold: 3-of-6. Staking contracts are upgradeable, but only subject to 3-of-6 multisig approval — no unilateral upgrade authority. Vesting contract (Arbitrum) is administered by a comptroller role (issue/adjust/cancel vesting plans, change recipient, transfer comptroller). Protocol governance decisions are made by token-weighted majority on Snapshot.

(f) Current economic arrangements and distribution policies

The following are the current, formally-adopted mechanisms that direct protocol resources, revenue, or tokens:

Revenue split (governance-approved): by Snapshot governance vote, protocol revenue is split 70% to $PEAR buybacks / 30% to operations — the standing, formally-adopted policy for protocol revenue. Buyback (programmatic): the 70% is used to purchase $PEAR on the open market; the acquired tokens are held, not redistributed. This is the primary way value accrues to token-holders. Grant Agreement (contractual): the Foundation directs up to $800,000, across four quarterly milestone payments (subject to KPI verification), to 155 Labs Ltd — the development company / a contributor entity, whose equity is held by a core contributor — for development services. Token vesting (programmatic): token allocations to the team, contributors, and investors are distributed over time via an on-chain vesting contract, per their vesting schedules. Treasury: controlled by the DAO via a pledge agreement (Fireblocks 3-of-6 multisig); deployment is subject to governance. Other than the above, there are no current dividends, fee- or revenue-sharing distributions to token-holders, or other programmatic payouts — value to holders is delivered via the buyback rather than direct distribution. No further distribution mechanisms have been formally adopted.

(a) Entity

155 Labs Ltd — a private limited company incorporated under the laws of England and Wales (Companies House No. 14691826), registered office 83 Baker Street, London, W1U 6AG. (Formerly "Pear Labs Ltd.")

(b) IP ownership & control

Under the Grant Agreement with the Pear Foundation, 155 Labs Ltd holds no exclusive Intellectual Property Rights in the Protocol (§5.2), and all Deliverables it produces for the Protocol are committed to be made available to the community under an open-source licence (§5.1). 155 Labs retains its own pre-existing IP and its branding (the project brand is currently unregistered), but grants the Foundation and Protocol community a perpetual, irrevocable, worldwide, royalty-free licence to any pre-existing IP it incorporates into the Deliverables (§5.3). 155 Labs has no subsidiary entities. (The Protocol's repositories are being operationalised under the applicable open-source licence.)

(c) Powers over DAO, treasury, protocol-controlled resources, and token administration

As an independent contractor engaged under the Grant Agreement, 155 Labs Ltd holds no contractual or administrative powers over DAO governance, the treasury, protocol-controlled resources (revenue), token administration, or reward parameters — under §7 of the Grant Agreement it has no authority to bind the Foundation or direct the Protocol. Two points of transparency: (a) 155 Labs is paid in $PEAR under the Grant Agreement, and any $PEAR it holds carries the same token-weighted governance rights as any other holder — no special rights; and (b) there is personnel overlap — its sole director (Atish) is also a Core Contributor/Controller of the Foundation. Any governance participation is by ordinary token-weighted majority on Snapshot; on-chain admin actions require the 3-of-6 multisig and are not controlled by 155 Labs as an entity.

(d) Powers over Foundation

As an entity, 155 Labs Ltd holds no ownership, control, or formal decision-making authority over the Foundation — it is engaged as an independent contractor under the Grant Agreement (§7), with no authority to bind the Foundation. Indirect influence exists through two channels, disclosed for transparency: (a) shared personnel — 155 Labs' sole director (Atish) is also a Core Contributor/Controller of the Foundation and, in that Foundation capacity, participates in its decision-making; and (b) any $PEAR held by 155 Labs (received under the Grant Agreement) carries ordinary token-weighted governance rights, the same as any holder — no special or enhanced rights.

(e) Contract/admin powers

155 Labs Ltd holds no pause, upgrade, or governance-executor authority as an entity. On-chain admin actions (upgrades, treasury movements, governance execution) require the Fireblocks 3-of-6 multisig, and protocol governance decisions are made by token-weighted majority on Snapshot. The multisig signers are individual core contributors (which may include personnel associated with 155 Labs); no single signer — and no single party — can act unilaterally (3-of-6 required).

(f) Current economic arrangements and distribution policies

The sole current mechanism directing protocol resources to 155 Labs Ltd is the milestone-based Grant Agreement with the Pear Foundation: up to $800,000, paid across four quarterly milestone payments (KPI-gated), for development services. 155 Labs uses the proceeds to pay its development team/contributors and fiat vendor costs (converting a portion of $PEAR to fiat as needed). Its equity is held by a core contributor (Atish). Separately, individual team members and contributors hold token allocations that vest over time via the on-chain vesting contract — allocations to individuals, not to 155 Labs as an entity. Other than the Grant Agreement and individual vesting allocations, no governance-approved, contractual, or programmatic mechanism currently directs protocol-controlled resources, treasury assets, fees, revenue, rewards, or token distributions to 155 Labs, its equity holders, or its contributors.

(a) Planned but not yet executed airdrop

N/A, all airdrops have taken place and the planned small remaining airdrop allocation has come back into Treasury as we decided upon better incentive mechanisms than airdropping our native token.

(b) Executed airdrop

Season 1 — contract 0x2b7e7Aa4120aB81361C46CB5f3dC879de5D85dfd, event AirdropClaimed(address indexed user, uint256 amount). 447 claimers, 9,450,400 PEAR claimed of 10,000,000.

Season 2 — contract 0xe35F40005d3ae623beB929d3A2050Ad6333d82Af, event Claimed(address indexed account, uint256 nftId) (ERC-1155 tiered). 246 claimers, 535 claims.

(c) No airdrop planned or conducted

N/A

(a) Date & component affected

No exploits affecting the token as of 2026-07-06

(b) Exploit vector summary

N/A

(c) Quantified impact

N/A

(d) Remediation/response taken

N/A

(e) Current status

N/A

(f) References (optional)

N/A

(a) Regulatory, Legal & Tax Risks

The regulatory treatment of digital assets is evolving rapidly and inconsistently across jurisdictions. Adverse or conflicting changes could materially affect the Project, the token, and its holders. The following risk factors are not exhaustive.

Impact of regulatory change on token operations and listings. The token generated (TGE September 2024) and is live; however, future changes in law could affect the Project's ability to deliver tokens under existing agreements, maintain on-chain liquidity, or list on additional venues. The token is not currently listed on any centralized exchange — all liquidity is protocol-owned on decentralized venues (Arbitrum). New frameworks (e.g., the EU's MiCA regime, evolving U.S. treatment of tokens and decentralized trading, and analogous regimes elsewhere) could restrict venue access, impose registration or disclosure obligations, or, if the token were characterized as a security or other regulated instrument in a given jurisdiction, impair the ability to list or maintain markets there. Such a characterization could also retroactively affect prior distributions.

Entity-level regulatory impact. The Project's activities are conducted across multiple entities, each subject to distinct and changing regimes: the Pear Foundation (Cayman Islands foundation company — subject to Cayman foundation, economic-substance, AML/CFT and periodic renewal requirements); a UK development company, 155 Labs Ltd (providing software-development services under a grant agreement, subject to UK law including the financial-promotion regime; it does not market the protocol in the United Kingdom); and protocol governance conducted by a DAO via on-chain voting. A prior token-issuing entity, Pear Garden Ltd (BVI), has been dissolved. Regulatory or enforcement developments — including licensing requirements, economic-substance or registration obligations, or enforcement actions — could force changes to this structure or to operations, increase compliance cost, or create liability. DAO governance carries particular uncertainty: some jurisdictions may treat a DAO as an unincorporated association or partnership, potentially exposing participants to liability, and the legal status of DAO decision-making remains unsettled. The Project also relies on third-party service providers (including nominee and corporate-services providers), whose regulatory status could change.

Tokenholder tax treatment. The tax treatment of acquiring, holding, staking, and disposing of the token — and of receipts such as staking rewards and airdrops — is uncertain, varies by jurisdiction, and may change, potentially with retroactive effect. Staking (stPEAR) rewards and airdrop receipts may constitute taxable events. The Project does not provide tax advice; each tokenholder is solely responsible for understanding and meeting their own tax obligations and should consult their own advisors.

Jurisdictional and user-access restrictions. The protocol is a decentralized platform that does not actively market to any group and maintains a published list of restricted territories, including sanctioned jurisdictions. Offerings under private agreements have been limited to eligible investors (e.g., professional/sophisticated investors under the UK financial-promotion regime). These restrictions create risk in both directions: users may attempt to circumvent access controls (e.g., via VPN), creating compliance and enforcement exposure for the Project; and users accessing from restricted jurisdictions bear legal risk themselves. In addition, as a result of UK Financial Conduct Authority restrictions, no UK retail investor may enter into perpetual contracts through the Services. Changes to sanctions regimes or access-restriction requirements could reduce the addressable user base or impose new obligations.

(b) Protocol, Technology & Security Risks

The Protocol is experimental software and carries material technology risk. The risks below are not exhaustive.

Smart-contract vulnerability. The Protocol and all associated smart contracts are subject to bugs, errors, design flaws, and vulnerabilities that could be exploited, potentially resulting in partial or total loss of user funds. On-chain transactions are immutable and irreversible once confirmed; there is no technical mechanism to reverse or override an executed transaction. Security audits are point-in-time assessments and do not eliminate risk from novel attack vectors (including flash-loan attacks) discovered after the audit date.

Third-party dependency and composability. The Protocol integrates with and depends on third-party infrastructure it does not control, audit, or guarantee — principally Hyperliquid and symm.io for execution and clearing, together with bridges, oracles, and market-data feeds. A bug, failure, compromise, insolvency, or discontinuation of any such system may cascade into the Protocol and result in loss of funds. This composability risk is inherent to the Protocol's architecture.

Oracle and data-feed risk. Pricing and liquidation logic rely on external market data and price feeds. Oracle failures, latency, or data manipulation may cause trades or liquidations to execute on incorrect data.

Blockchain and network risk. The Foundation does not control any underlying blockchain. Networks are subject to hard/soft forks, congestion, downtime, chain halts, and variable and unpredictable transaction (gas) costs, any of which may materially impair the Services.

Key management. Users are solely responsible for securing their private keys; loss is permanent and irrecoverable, and no party can restore access. Treasury assets are held under a Fireblocks MPC multisig (3-of-6) as a mitigating control, which reduces but does not eliminate key-compromise risk.

Availability and liquidation. The Services are provided "as is" and "as available," with no warranty of uninterrupted, secure, or error-free operation, and may become temporarily or permanently unavailable due to denial-of-service attacks, software failures, third-party protocol changes, or force-majeure events. Positions in Perpetual Contracts are subject to liquidation; in stressed markets, liquidity may deteriorate and positions may not close at desired prices, producing losses beyond expected parameters.

Cryptographic advances. Advances in cryptography, including quantum computing, may present future risks to the security of digital assets and the Services.

(c) Token Economics, Unlocks & Incentive Risks

Nature of the token. The token is a governance token designed solely to facilitate decentralized governance participation. It does not constitute a security or investment instrument and confers no right to dividends, distributions, profit-sharing, or any economic interest in the Foundation or any affiliate. It is not marketed as an investment, and no representation is made as to its present or future value. Any value is speculative and may fall to zero.

Value-accrual dependency on discretionary buyback. Protocol revenue is currently allocated 70% to token buybacks and 30% to operations under a governance-enshrined policy. This allocation is a capital-allocation choice subject to DAO governance and can be changed, reduced, or suspended. If revenue declines or the buyback policy is altered, the token's principal value-accrual mechanism weakens correspondingly. Buybacks are not guaranteed and do not create any entitlement.

Revenue concentration and profitability. Protocol revenue is highly concentrated (a substantial majority derives from a small number of front-end clients) and closely tracks trading volume, which is volatile and market-driven. The business operates near breakeven; there is no assurance of sustained profitability, and a downturn in volume would reduce both operating runway and buyback capacity.

Unlock and vesting overhang. A significant portion of supply was sold or allocated subject to vesting (see prior token sales), including two private rounds under multi-year cliff-and-linear schedules and an OTC tranche unlocking through 2027. As tokens unlock, holders may sell, creating sustained sell pressure that could depress price independent of protocol performance.

Liquidity depth. All token liquidity is protocol-owned across two Arbitrum DEX pools, together representing only a low-single-digit percentage of supply. This limited depth means large transactions may cause significant price impact, and liquidity could deteriorate rapidly in stressed conditions. The token is not listed on any centralized exchange.

Governance concentration. Voting power equals proportional token ownership. Large holders (including early investors and insiders) may exert significant or controlling influence over governance outcomes, including the buyback policy itself.

Treasury composition. The treasury holds a material allocation in a single volatile digital asset (HYPE) alongside stablecoins; adverse price movement in that asset would reduce treasury value and runway.

Predecessor-entity obligations. The Foundation has stated it assumes no obligations of the dissolved predecessor entity (the original BVI token issuer) in respect of the earliest token issuances; holders relying on those original instruments should understand this limitation.

Market and regulatory value risk. Digital-asset prices are highly volatile. Regulatory recharacterization of the token in any jurisdiction (see Regulatory, Legal & Tax Risks) could impair transferability, venue access, or value.