Risks

There are 2 types of risks when using Hyperplex, smart contract risk and illiquidity risk.

Smart Contract Risk

When doing anything in DeFi, there is always the risk of a bug in the protocol. The minimize this we go through independent audits, commercial audits, white-hat competitions, live monitoring, and more. All of those steps go into security Hyperplex, but I can't the say same for our rehypothecation vaults. We will generally choose the safest options for rehypothecation, but if you choose a certain protocol to rehypothecate into just know that you are also assuming their smart contract risk. For example if you want to use Hyperplex to wrap a Uniswap position and rehypothecate into AAVE, you have Hyperplex, Uniswap, and AAVE's smart contract risk.

Illiquidity Risk

Illiquidity is a term for when you want to withdraw a position but can't. For example, if you're a lender on AAVE but the entire pool is borrowed out you won't be able to withdraw until some borrow positions are closed or liquidated. In the meantime, AAVE will pay you an enormous lending APY.

The same is true for Hyperplex. If you use rehypothecation and the rehypothecation protocol (like AAVE) like some illiquidity risk, you would also not be able to withdraw until their illiquidity is resolved (which is typically very fast). If you use Congestion Pricing then if a tick in your liquidity range is entirely borrowed out, you can withdraw the rest of your range but you will have to wait for that tick. And again, your yield will skyrocket during that time to compensate. We aim to minimize illiquidity to a few minutes if it ever occurs.

If you don't use Congestion Pricing or Rehypothecations with illiquidity, then you don't have to worry about this risk.