Risk Management
Vault protection mechanisms: max drawdown, daily drawdown, and auto-pause.
Overview
Atract's risk management system protects investor capital through automated drawdown limits enforced by smart contracts and oracle monitoring.
Drawdown Limits
Max Drawdown
Definition: Maximum percentage loss from peak balance before vault auto-pauses.
Example:
Initial: $10,000
Peak: $11,000 (after profits)
Max Drawdown: 20%
Pause Trigger: $8,800 (20% below peak)
If balance drops to $8,800 → Vault pauses automaticallyTypical Range: 15-30%
Daily Drawdown
Definition: Maximum percentage loss within any 24-hour period.
Example:
Balance at 00:00 UTC: $10,000
Daily Drawdown: 5%
Pause Trigger: $9,500
If balance drops below $9,500 in one day → Vault pauses
Resets at midnight UTCTypical Range: 5-10%
Auto-Pause System
When Triggered:
Vault status changes to PAUSED
No new trades allowed
Can close existing positions (reduce-only)
Oracle continues monitoring
Unpause Options:
Balance recovers above limit → Trader can manually unpause
Trader closes all positions and settles vault
Oracle Monitoring
Every 60 Seconds:
Polls Hyperliquid for vault balance
Updates on-chain balance
Checks drawdown limits
Auto-pauses if breached
Balance Freshness:
Hard block: >10 minutes (trade rejected)
Warning: 5-10 minutes
Fresh: <5 minutes
Setting Risk Limits
Conservative (Investor Priority):
Max Drawdown: 15-20%
Daily Drawdown: 5%
Tighter capital preservation
Moderate (Balanced):
Max Drawdown: 20-25%
Daily Drawdown: 5-7%
Standard for most deals
Aggressive (Trader Flexibility):
Max Drawdown: 25-30%
Daily Drawdown: 7-10%
More room to operate
Best Practices
For Traders:
Keep 5-10% buffer below limits
Set stop-losses
Monitor drawdown daily
Close positions before hitting limits
For Investors:
Set realistic limits (20-25% standard)
Don't set too tight (<15%)
Monitor vault status regularly
Trust the auto-pause system
Related Pages
Risk Controls - Technical details
Vault Lifecycle - Complete vault journey
For Investors - Quick start
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