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

# Risk Framework

> How SolHedge thinks about and mitigates protocol risk.

| Risk Type               | Mitigation                                                                                                                  |
| ----------------------- | --------------------------------------------------------------------------------------------------------------------------- |
| **IL Risk**             | Mitigated via dynamic hedging on Jupiter Perps and Phoenix Trade. Residual IL from imperfect hedge sizing can still remain. |
| **Smart Contract Risk** | Penetration tested by Daemon. Audit report available upon request.                                                          |
| **Oracle Risk**         | Price feed manipulation risk, mitigated by using multiple on-chain sources.                                                 |
| **Liquidity Risk**      | Concentrated positions may face range-out events, mitigated by AI range adjustment.                                         |
| **Counterparty Risk**   | Jupiter Perps and Phoenix Trade carry exchange-level risk, mitigated by position sizing limits.                             |

## Setting Expectations

SolHedge spends most of its time in a low-vigilance, fully-deployed state, closer to normal LPing than to a constantly-trading strategy. The system's protective mechanisms activate during the rarer, high-risk moments that matter most, not on every price fluctuation.

<Warning>
  Defensive mode has a real cost: when liquidity is pulled to stablecoins to protect capital, fee accrual stops and the LP position is realized at that point in time, including any IL that had already occurred. If conditions turn out to be a false alarm, some upside can be missed. This tradeoff is intentional. The framework is deliberately biased toward avoiding large downside over smoothing every dip.
</Warning>

<Info>
  This documentation is for informational purposes only and does not constitute financial advice or an offer of securities.
</Info>