Risks

Like all financial products, SHRED carries risks. These include:

• Stablecoin de-pegging

• Infrastructure failures

• Prolonged negative funding rates

• Unexpected rises in operational costs.

• Loss of delta neutrality

• Bluechip liquidity shock

• Prolonged high borrow APRs

To mitigate these, SHRED employs:

• Conservative leverage and delta-neutral balancing.

• Continuous monitoring of liquidation risk using liquidation price movement metrics.

• Automated rebalancing with safeguards for slippage, spreads, and gas costs.

• Emergency procedures with buffer fund deployment in case of extreme market stress.

While liquidation risk cannot be entirely eliminated, SHRED’s framework minimizes exposure through conservative thresholds and partial liquidation strategies if necessary.