> For the complete documentation index, see [llms.txt](https://doc.monetrix.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://doc.monetrix.xyz/monetrix-pilot/reference/protection-risks.md).

# Protection and risks

## Liquidation-loss protection

Monetrix provides 100% liquidation-loss protection when a verified liquidation is caused by Monetrix execution or risk-management failure, subject to the signed Pilot Terms.

Eligibility requires that:

* The API wallet remained authorized
* The user did not manually trade
* The user did not move strategy collateral
* The account remained dedicated to Pilot
* Monetrix was responsible for the liquidation event

Protection applies to the verified liquidation loss caused by Monetrix. It does not cover unrelated market losses, user actions, revoked permissions or exclusions defined in the Pilot Terms.

## Funding risk

Funding rates are variable and may fall or turn negative. Expected APY is not fixed.

## Execution risk

Slippage, spread, partial fills and fast price movements may reduce performance or temporarily create hedge deviation.

## Leverage and liquidation risk

Higher leverage creates a smaller safety buffer. Rapid price moves may trigger rebalancing, partial deleveraging and additional trading costs.

## Hyperliquid infrastructure risk

Pilot depends on Hyperliquid account infrastructure, APIs, liquidity, matching and risk systems. Interruptions may delay execution or rebalancing.

## Authorization risk

If API authorization expires or is revoked, Monetrix can no longer trade, rebalance or close the strategy.

## User-action risk

Manual trades, transfers or unsupported assets can interfere with the strategy and may invalidate protection eligibility.

## USDC risk

Pilot is USDC-denominated and remains exposed to USDC issuer and depegging risk.

## What self-custody does and does not mean

Pilot does not require users to deposit into a Monetrix contract. This removes Monetrix deposit-contract exposure, but it does not eliminate funding, execution, authorization, Hyperliquid infrastructure or stablecoin risk.