Slashing Risk
What is Slashing?
Slashing is HIP-3's primary enforcement mechanism for ensuring builders maintain market integrity. When deploying perpetual markets on Hyperliquid, Stratium's 500k HYPE stake serves as collateral that can be partially or fully slashed for protocol violations.
How Slashing Works
Validator-Driven Process
Slashing decisions are made by validators through stake-weighted voting. If validators determine that a deployer's actions have harmed protocol correctness, uptime, or solvency, they can vote to slash the deployer's stake.
Slashing Scope
The amount slashed can range from partial to full confiscation of the entire 500k HYPE stake, determined by the median of validator votes.
What Happens to Slashed Funds
Slashed HYPE is burned rather than redistributed to affected traders or validators. This preserves platform neutrality and avoids creating perverse incentives.
Timing Considerations
Even if Stratium initiates unstaking and begins the withdrawal process, the stake remains slashable during the entire 7-day unstaking queue.
Slashing Conditions
Technical Focus
Slashing focuses on the technical impact of deployer inputs rather than intent. It does not distinguish between malicious behavior and incompetent mistakes — both can result in slashing if they harm the protocol.
Slashable Behaviors
According to Hyperliquid's official documentation, slashing may occur for:
Irregular inputs that harm protocol uptime — Actions that disrupt the normal operation of HyperCore infrastructure
Irregular inputs that threaten solvency — Behaviors that could compromise the mathematical solvency guarantees of the protocol
Irregular inputs affecting protocol correctness — Actions that cause incorrect calculations, settlements, or other protocol failures
The guiding principle is that any slashable behavior should be accompanied by a bug fix in the protocol implementation. Hyperliquid's goal is that "slashing should not be required in its final state" — it's a safety mechanism for rollout, not a permanent enforcement tool.
Specific Risk Areas
Oracle manipulation or failure: Deployers are responsible for oracle operation and price integrity. Oracles should reference well-defined assets or data feeds that are difficult to manipulate and have underlying economic significance.
Attempted malicious inputs: Even attempted malicious deployer inputs that do not ultimately cause protocol issues are slashable. Conversely, inputs that cause issues but are not deemed "irregular" are not slashable.
Market parameter mismanagement: Poor configuration of leverage limits, margin requirements, funding rates, or other market parameters that lead to protocol harm.
Impact on Traders
If Stratium's Stake is Slashed
Market halt procedures: Deployers can settle assets using the haltTrading action, which cancels all orders and settles positions to the current mark price. The same action can resume trading.
Trader fund security:
Traders maintain custody of their collateral in Hyperliquid's smart contracts, not with Stratium
HIP-3 inherits Hyperliquid's carefully designed mathematical solvency guarantees
Open positions would be settled at prevailing mark prices if markets are halted
Collateral remains accessible to traders through the Hyperliquid protocol
Settlement process: In the event of a slashing incident requiring market shutdown:
All active orders are cancelled
Open positions are settled at current mark price
Trader collateral is preserved in Hyperliquid's core infrastructure
Markets may be paused or permanently delisted depending on severity
Realistic Assessment
Hyperliquid's Position
According to Hyperliquid's documentation: "In the most likely outcome, slashing never happens on mainnet. A large amount of technical work has gone into making HIP-3 a self-contained and technically robust system."
Residual Risk
Despite mitigation efforts, slashing remains a protocol-level risk that traders should understand:
No deployer is immune — Even well-intentioned operators can face slashing if technical errors harm the protocol
Validator discretion — Slashing decisions ultimately rest with validator consensus, not predetermined rules
Irreversible — Once slashed, HYPE is burned and cannot be recovered
For Traders
Risk Awareness
Understand that Stratium, like all HIP-3 deployers, operates under slashing risk
Your collateral remains in Hyperliquid's core infrastructure, not directly with Stratium
In a worst-case scenario, positions would be settled at mark price, not liquidated at unfavorable prices
Monitoring
Stay informed about Stratium's operational status through official channels
Monitor validator governance discussions for any HIP-3 slashing proposals
Understand the settlement procedures for your specific positions
Additional Resources
For complete technical specifications and current slashing parameters:
This risk disclosure is based on information available as of October 2025. HIP-3 specifications may evolve as the protocol matures. Traders should monitor official Hyperliquid documentation for the latest updates.
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