risk cannot be removed. it can be shaped.
a hedge exchanges one risk profile for another. this page describes every risk hedgr knows it is introducing.
at 60% coverage, 40% of directional exposure remains — and the hedged portion still carries basis, funding, liquidity and oracle risk. 100% coverage is not risk-free; it is a different set of risks.
the value of your holdings moves with the market. an offsetting position reduces this, and only this.
the hedge instrument and the protected asset are not the same thing. their prices can diverge, leaving a gap in both directions.
perpetual positions pay or receive funding. a long-lived hedge can cost more than the drawdown it prevented.
quotes assume depth. in thin markets, entering or exiting moves the price against you.
leveraged hedges have maintenance margin. a sharp move against the hedge leg can close it at the worst moment.
every mark comes from a price source. a stale or manipulated feed misprices collateral, coverage and liquidation levels.
code can fail or be exploited. a hedge that is technically correct can still be lost to a contract failure.
tokenized equities trade continuously while the underlying market does not. gaps at session open cannot be hedged away.
a token representing an asset depends on issuance, redemption and custody working as described.