Risk framework

Everything that can go wrong with a Stox position, what we do about each one, and exactly which number on the screen tells you where you stand. If a risk is not on this page, ask us why.

1. Price exposure

A vault position is roughly half stock token. If the stock falls, the position falls, partly. If it rises sharply, the position converts toward USDG and captures less upside than holding the stock. Fees offset this; they do not guarantee a positive total return.

What we show: stock exposure as a multiple of your deposit, current asset mix, and an impermanent-loss estimate against simply holding.

2. Range risk

Concentrated liquidity only earns inside its range. When price leaves it, the position holds one asset and earns nothing until rebalanced, and rebalancing realises the current mix at a cost.

What we do: regime-based ranges (tighter in session, wider off-hours and around earnings) and rules-based rebalancing.

What we show: range used (where price sits inside the range) and the cost of the last rebalance.

3. The clock: 24/7 tokens, 9:30 to 4:00 stocks

Stock tokens trade continuously; the underlying stock does not. Off-hours the tokenized price has no exchange print to anchor to: spreads widen, liquidity thins, and the next open can gap through any range or any liquidation price in one step. This is the single most important difference between this platform and one built on crypto-native assets.

What we do: wider ranges off-hours and around earnings; conservative collateral factors that assume a gap; liquidation distance expressed as a stock move so it can be compared to a plausible gap.

What we show: the live NYSE session state next to every position, the share of your fees earned while NYSE was closed, and liquidation distance in percent of the stock price.

4. Leverage and liquidation

A looped position borrows against its own collateral. If collateral value falls enough, the loan is liquidated at a penalty. Losses are magnified by the leverage multiple, and a gap can move price past the liquidation point without giving you a chance to act.

What we do: per-market leverage caps; partial liquidations; liquidations paused while the price feed is stale.

What we show: health factor with the 1.00 threshold marked, liquidation price, liquidation distance, and a plain-English line that says what has to happen for you to be liquidated. See Lending.

5. Hedging (Delta-neutral)

The short that cancels price exposure has its own costs and its own liquidation price. Funding can turn against you, the hedge drifts as the vault’s mix changes, and a sharp rise can liquidate the short before the vault gains offset it.

What we show: funding cost, residual exposure since the last rebalance, and the short’s liquidation distance.

6. Oracle risk

Risk calculations use Chainlink’s Robinhood Tokenized Equity feeds, which update on a 0.5% deviation or a 24-hour heartbeat. A stale or wrong feed would misprice collateral.

What we do: share prices and health use the feed, never the pool spot; liquidations and new borrows pause when a feed is past its heartbeat; feed addresses are published per market in Markets.

7. Liquidity risk

Withdrawing from a vault or the lending market depends on liquidity being there at that moment. A thin pool means slippage on the swap back to USDG; a fully utilised lending market means waiting for repayments.

What we show: expected slippage before you confirm a withdrawal, the option to withdraw both assets unswapped, and the lending market’s available liquidity and utilisation.

8. Smart-contract risk

Contracts can have bugs. The vault and lending contracts will be published with source verified on the Robinhood Chain explorer, deployed with conservative caps on deposits at launch, and raised only as they prove out. Admin actions (adding markets, changing parameters) will be time-locked and announced.

What we show: contract addresses, the current deposit caps, and any pending parameter changes.

9. Asset risk

USDG is a stablecoin issued by Paxos; it can depeg. Stock tokens depend on their issuer honouring the claim on the underlying share, and on how corporate actions (dividends, splits, delistings) are handled by that issuer. Neither is controlled by this protocol.

What we do: markets are listed only with a verified feed and a verified token contract; a market can be frozen (no new deposits, withdrawals open) if its token or feed misbehaves.

10. What the numbers are and are not

• Projected APY is trailing 30-day fees, annualised. It describes the past.
• Health factor and liquidation distance are live and computed from the current feed price.
• Explanations in plain English are generated from the same live numbers. They are a translation, not a recommendation.