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Protocol Risks

What can go wrong. Read this before depositing.

Smart Contract Risk​

Multiple upgradeable smart contracts. Audited and tested, but undiscovered bugs could still lead to loss of funds.

  • OpenZeppelin upgradeable proxy pattern
  • Factory contract is the permanent owner of all pool components
  • Upgrades require owner authorization

Oracle Risk​

Swap pricing, deposits, and withdrawals all depend on oracle feeds:

  • Pyth Network — Pull oracle for deposits/withdrawals, push oracle for stablecoin pricing
  • HyperCore — BBO, mark, and oracle prices for swaps

Oracle failures, manipulation, or extreme latency → incorrect pricing.

Mitigations: Staleness checks, confidence bands, stable price divergence circuit breaker.

Hedging Residual Risk​

Delta hedging eliminates IL, but residual risks remain:

  • Execution lag (~800-1000ms between swap and hedge fill)
  • Partial fills on Core order book
  • ADL in extreme market conditions
  • Liquidation risk if Core collateral becomes insufficient

Market Risk​

  • Funding costs — Perp positions have ongoing funding that affects LP returns
  • Liquidity risk — Extreme stress could thin out Core's order book
  • Bridge risk — Assets bridged between EVM and Core depend on Hyperliquid's bridge

Withdrawal Risk​

  • 3-day queue for withdrawals
  • Processing may be delayed beyond 3 days in extreme conditions
  • Instant withdrawals depend on available EVM liquidity

Staking Risk​

See Staking Risks.

Regulatory Risk​

DeFi operates in an evolving regulatory landscape. Changes could affect access to or operation of HyperAMM.

caution

Not an exhaustive list. Only deposit what you can afford to lose. DYOR.