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Counterflow uses clear rules to make sure a single wild market cannot drain the liquidity pool.

1. Max 10% exposure per market

To stop any single coin from threatening the vault:
  • Counterflow caps its unpaid coverage to at most 10% of total vault NAV on any one market.
  • If a market reaches this 10% cap, Counterflow pauses further coverage on that specific coin until previous draws are repaid by fee sweeps or trader losses.
  • The rest of the vault’s capital remains safe.

2. Max 50% total exposure

Across all backed markets combined:
  • Total outstanding coverage cannot exceed 50% of the vault’s total assets.
  • At least 50% of the vault’s USDC is always sitting as uncommitted cash, ensuring LPs can process normal withdrawals even during volatile market events.

3. The 3-day redemption cooldown

Withdrawals require a 3-day cooldown:
  • You submit a redemption request.
  • The contract locks your shares for 3 days.
  • Once 3 days pass, you claim your USDC at the current share price.
This stops predatory traders from watching a sudden price move and draining the pool right before a loss is settled.

4. 24-hour profit unlocking

When income (fees or trader losses) is swept into Counterflow:
  • The profit unlocks smoothly over 24 hours.
  • This stops arbitrage bots from depositing 1 second before a fee sweep and withdrawing right after to steal yield from existing depositors.

See also