Summary
Understand the major risks of trading perpetual futures on Hype, including leverage, liquidation, funding costs, volatility, on-chain finality, and protocol risk.
Perpetual futures carry significantly more risk than spot trading. Before trading perps, understand how each risk can affect your funds.
Leverage Risk
Leverage amplifies both gains and losses. A 10x position that moves 5% against you can lose about 50% of the margin allocated to the position. Higher leverage makes smaller market moves more dangerous.
Liquidation Risk
Liquidation is the forced closure of a position when its collateral falls below maintenance margin. When this happens, the margin allocated to that position can be permanently lost. Hype perps use isolated margin, so liquidation affects the specific position and allocated collateral, not the rest of your account.
Funding Rate Risk
Funding rates are hourly payments between long and short traders. Depending on market conditions and your position side, funding can be paid out of your perps cash balance. Over days or weeks, funding can materially affect returns.
Mark Price Risk
Liquidation and take profit or stop loss triggers use mark price, not necessarily chart price. Mark price is a protocol reference price based on oracle pricing and local protocol activity. During volatile periods, mark price and chart price may differ.
Market Volatility Risk
Crypto markets can move quickly. Fast price moves can trigger liquidation before you can react. In extreme conditions, price can move through a stop loss before the closing market order fills.
On-Chain Finality Risk
Hype is a non-custodial interface. Trades, transfers, and transactions are executed on chain and cannot be reversed after confirmation. There is no chargeback or undo for losses, liquidations, bad trades, or incorrect transfers.
Third-Party Protocol Risk
Perpetual futures on Hype are provided by third-party decentralized protocols. Hype provides the user interface, while external protocols may handle trading infrastructure, order matching, liquidation mechanics, and custody. Protocol downtime, bugs, liquidity issues, or other failures can affect positions.
Perps are complex financial instruments and are not suitable for everyone. Only trade with funds you can afford to lose entirely.
FAQ
Are perps riskier than spot trading?
Yes. Perps add leverage, liquidation, funding, and protocol risks.
Can I lose all margin on a position?
Yes. If a position is liquidated, the margin allocated to that position can be lost.
Does a stop loss remove all risk?
No. Stop losses execute as market orders and may fill at a different price in fast markets.
Related articles: Leverage on Perps, Liquidation on Perps, Funding Rates on Perps.
Legal Notice
Perpetuals ("Perps") are provided by third-party protocols and are not available to U.S. Persons (citizens, residents, or anyone located in the U.S.). Do not attempt to access perps from within the United States.
For purposes of these Terms, a "U.S. Person" means: (i) any natural person resident in the United States; (ii) any citizen or permanent resident of the United States, including any such person temporarily located outside the United States; (iii) any entity organized or incorporated under the laws of the United States or any state thereof; (iv) any estate of which any executor or administrator is a U.S. Person; (v) any trust of which any trustee is a U.S. Person; (vi) any agency or branch of a non-U.S. entity located in the United States; (vii) any discretionary or non-discretionary account held by a dealer or fiduciary organized, incorporated, or (if an individual) resident in the United States; or (viii) any entity organized or incorporated outside the United States that is formed by a U.S. Person principally for the purpose of investing in unregistered securities or derivative instruments. "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia.
Representations and Warranties. By accessing or using Perps functionality, you represent and warrant that: (a) you are not a U.S. Person; (b) you are not accessing Perps from within the United States; (c) you are not accessing Perps on behalf of, or for the benefit of, any U.S. Person; (d) you will not use any VPN, proxy, anonymization service, location-spoofing technology, or other mechanism to conceal your location, misrepresent your residency, or circumvent geographic or eligibility restrictions applicable to Perps; and (e) you understand that these representations are material and that Hypeshot, Inc. is relying on them in providing you access to Perps functionality.
YOU ACKNOWLEDGE THAT PERPS TRADING CARRIES SUBSTANTIAL RISK OF LOSS. YOU HEREBY RELEASE AND HOLD HARMLESS HYPESHOT, INC. AND ITS AFFILIATES, REPRESENTATIVES, AGENTS, PERSONNEL, PARTNERS, LICENSORS, SERVICE PROVIDERS, OFFICERS, DIRECTORS, EMPLOYEES, AND CONTRACTORS (COLLECTIVELY, THE "COMPANY PARTIES") FROM ANY AND ALL LOSSES, DAMAGES, OR CLAIMS ARISING FROM OR IN CONNECTION WITH YOUR USE OF PERPS FUNCTIONALITY, INCLUDING BUT NOT LIMITED TO LOSSES FROM LIQUIDATION, LEVERAGE, MARKET MOVEMENTS, PROTOCOL FAILURES, OR THIRD-PARTY ACTIONS.