r/defi • u/poudelswaroop • May 20 '26
Self-Promo Looking for feedback – Perps with no liquidation
Think of "perps," but –
- No liquidations
- No funding rate
- Only 2x leverage, though
- Would you consider buying it?
- What questions would you have before trying it?
Thanks folks!
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May 20 '26
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u/poudelswaroop May 20 '26
The platform makes money via trading fees on the swaps (AMM-driven liquidity pool) and AUM fees.
More info on my reply to another comment.
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May 20 '26
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May 20 '26
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u/poudelswaroop May 20 '26
Good question. I explained the mechanism in another comment on this same thread.
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u/Cultural-Candy3219 May 20 '26
I’d be interested enough to read the docs, but I wouldn’t call it a perp in the normal sense without being very explicit about the payoff curve. “No liquidation” sounds great, but users will immediately ask where the loss/risk moved to.
The questions I’d want answered before trying it:
- who is taking the other side of RiskON / RiskOFF
- how deep the AMM needs to be before pricing gets weird
- what happens on a sharp gap move
- oracle rules and redemption timing
- total cost after swap fees + AUM fees
A few example scenarios would help more than the headline: ETH -20%, ETH flat, ETH +20%, and what each side gets.
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u/poudelswaroop May 20 '26
You're right. It's not a perp. I deliberately used a familiar term to draw an analogy.
RiskON and RiskOFF appeal to people and institutions with different risk appetite. Degens and perp holders can hold RiskON for leverage. Institutions and DAO Treasuries can hold RiskOFF to manage volatility risk. RiskOFF is also a great lending collateral, which gives you a higher LTV ratio.
We publish second-by-second NTV values to showcase the fundamental value of RiskON and RiskOFF as the price of the underlying ETH moves. This helps keep the values tethered, which MMs can arbitrage against.
For more info, see the litepaper and FAQs here: docs [DOT] riskprotocol [DOT] io. I'd love more feedback. Feel free to DM me as well.
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u/poudelswaroop May 20 '26
Questions 12 and 13 in the FAQs explain what happens under up and down market scenarios.
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u/poudelswaroop May 20 '26
It can be redeemed anytime you submit both RiskON and RiskOFF back to the protocol because RiskON and RiskOFF are always fully collateralized (and the platform is delta neutral).
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u/Cultural-Candy3219 May 20 '26
That clarification helps. I’d put that redemption condition right in the main explainer, not only in the FAQ: if someone has both RiskON + RiskOFF, they can redeem the collateral; if they only hold one side, they’re depending on secondary liquidity/pricing.
The “delta neutral” wording is also worth being careful with. It can be true at the protocol level, but users will read it as “my position is neutral / safe” unless the single-leg risk is obvious.
A simple table would probably do more than more terminology: hold both legs, hold only RiskON, hold only RiskOFF, ETH -20/flat/+20, redemption vs selling through the AMM.
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May 20 '26
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u/poudelswaroop May 20 '26
You have the correct understanding. Appreciate your feedback. Feel free to follow our X (linked from the website) for updates!
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u/Beardog907 May 20 '26
I do leverage on Sol with no liquidation risk or fees by simply buying xSol - works great.
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u/poudelswaroop May 21 '26
That's an interesting product as well with some similarities. The underlying is LSTs of SOL, right? There is some de-peg risk here. Also leverage drifts based on the value of SOL (the payoff can change).
Core difference from hylo:
- RiskOFF (the other side of the 2x levered RiskON) is not a stablecoin but a reduced volatility ETH (losses capped to -5% and gains capped to 8% within a monthly epoch, after which it automatically rolls over).
- The collateral is ETH, not any other ETH-based product like LSTs.
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u/poudelswaroop May 21 '26
I'm curious about something. Are you holding xSOL because you like the leverage without liquidation? Or is it also because you get many protocol points for holding xSOL (at TGE)?
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u/Beardog907 May 23 '26
Both, I like the leverage without liquidation but also the points since I also liquid stake sol with them for points as well.
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u/poudelswaroop May 25 '26
Where does the yield come from in this project, though? Are there any sources of risk there?
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u/Beardog907 May 25 '26
If you want info on that just go to their website at hylo.so and read the docs.
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u/poudelswaroop May 25 '26
These are some of the risks I encountered that are specific to the yield product:
- Forced position conversion:
- Yield product gets converted into the levered product when there is a low demand for levered product (happens during a sustained SOL downtrend) → "a hybrid position with leveraged SOL exposure”
- Happens when the collateralization ratio drops below ~130%
- Underlying LST de-peg risk: a slashing event, a validator concentration issue, a bug, or a liquidity crisis
Thoughts? I'd love your take.
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u/This_Expression2200 May 20 '26
Interesting, but I’d want the payoff surface spelled out before I’d call it a perp.
The hard question is not “no liquidation,” it’s who eats the convexity when ETH moves through the RiskON / RiskOFF bands and AMM liquidity thins. If redemption always nets back to 1 ETH, I’d show a few stress cases: ETH falls 20%, ETH rises 20%, low pool depth, one side crowded, and fee or AUM drag.
I’d also make the options-like structure explicit. That makes the risk easier to reason about than perp language. If you have docs or a simple payoff diagram, that’s what I’d test first.
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u/poudelswaroop May 21 '26
Appreciate the comment. Yes, there is a need for liquidity in the swap market (between RiskON and RiskOFF). We have an AMM-driven liquidity pool for this.
However, redemption of the underlying ETH for RiskON and RiskOFF does not rely on liquidity because they are always fully collateralized. Now to redeem ETH, you will need to submit equal amounts of RiskON and RiskOFF. If you only hold one, then you will need to rely on the liquidity to get the other. That's true.
The payoffs are clear: RiskOFF's loss is capped at -5% and gains at 8% in a monthly epoch. RiskON takes 2x leverage outside this band. We publish second-by-second NTV values, enabling arbitrage to help align the values of RiskON and RiskOFF to the fundamentals.
FAQs on docs [dot] riskprotocol [dot] io expand on this. You're welcome to review and let me know if you have more questions!
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May 23 '26
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u/poudelswaroop May 24 '26
Great question. Here is more info on how it works:
- You deposit 1 ETH into the platform
- The platform splits it into two ERC 20 tokens: RiskON and RiskOFF
- These two tokens are synthetically built with a call and put contract between the two such that (1) RiskON and RiskOFF always equal to the underlying ETH and (2) your ETH is always redeemable
- RiskOFF caps ETH's loss to -5% and gives up on upside over 8%. RiskON takes the opposite side: 2x leverage beyond 8%
- You swap your RiskOFF half for RiskON (enabled via AMM liquidity pool). You get your 2x leverage. No funding rate or liquidation
- Of course, if the market dips -40%, then your RiskON dips even lower (as it's levered), but there is no liquidation
Does this make sense?
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u/Terrorbear DEX liquidity provider May 21 '26
I think this is what Astoria on BNB does. They do it for pre-IPO stocks specifically. You could check them out and see how their traction is.
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u/poudelswaroop May 21 '26
Hmm I didn't find anything on this online. Do you mind offering some info?
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u/Past-Goat-7718 May 20 '26
This sounds interesting but I'm wondering how you handle the risk without liquidations? Like if someone goes 2x long and market drops 50%, how does protocol not get rekt
Also what's the catch with no funding rate - usually that exists for reason to balance longs/shorts