> ## Documentation Index
> Fetch the complete documentation index at: https://docs.hyro.network/llms.txt
> Use this file to discover all available pages before exploring further.

# Risks

> The honest version. Read this before depositing.

Hyro vaults are a high-risk allocation. This page states the risks plainly and what mitigates each.

<Warning>
  LPs should expect drawdowns and treat Hyro vaults as a high-risk allocation. Trader strategies can and do fail. Crypto markets are volatile.
</Warning>

## Market risk

Crypto markets are volatile and strategies can fail. There is no guaranteed return. Your capital is exposed to live trading PnL.

## Manager risk

A Direct Vault manager can draw down materially before policy enforcement triggers.

**Mitigations:** capped vault TVL during beta · manager-set DD shutdown limits enforced on-chain · Phase 3 insurance fund.

## Oracle risk

NAV reporting depends on the Hyro oracle. This is the **single largest trust assumption in Phase 1**. A successful oracle attack could mint shares at a false NAV — the primary residual smart-contract risk.

**Mitigations:** independent watchdog cross-validation today · multi-signer oracle in Phase 2 · zkTLS proofs of CEX state in the long-term roadmap.

[Full detail on trust assumptions →](/resources/decentralization)

## Counterparty risk — Bybit

All trading capital sits on Bybit during the active trading window.

**Mitigations:** read-only API keys (trade-only, no withdrawal permission) · multi-exchange diversification underway · on-chain execution via Drift + Phoenix planned for Phase 4, removing CEX counterparty risk for the on-chain track.

## Counterparty risk — HyroTrader operator

HyroTrader operates the Bybit sub-accounts and the bridge between vault and exchange.

**Mitigations:** multi-sig (Squads 3/5) on operator wallets · on-chain audit trails · a 5-year track record with \$5M+ paid out · DAO-controlled operator wallet planned for Phase 4.

## Smart contract risk

Audited code can still contain vulnerabilities.

**Mitigations:** Ackee Blockchain audit in progress, results published before mainnet · capped initial TVL during beta bounds exposure.

## What protects you, summarized

<CardGroup cols={2}>
  <Card title="On-chain everything" icon="link">
    Deposits, withdrawals, shares, fees, and payouts all settle on-chain and are independently verifiable.
  </Card>

  <Card title="Programmatic DD limits" icon="gauge">
    Drawdown shutdowns and leverage caps are enforced by smart contract, not discretion.
  </Card>

  <Card title="Manager skin-in-the-game" icon="user-lock">
    Direct Vault managers stake 5% of TVL, locked and visible on-chain.
  </Card>

  <Card title="Proof of reserves" icon="shield-check">
    The payout vault balance is queryable on-chain at any time.
  </Card>
</CardGroup>

<Info>
  This is not financial advice. Detailed risk disclosures are published before mainnet launch.
</Info>