Risk Management
Syntetika's architecture is built to isolate and contain risk. The strategy is delta-neutral toward Bitcoin's price, but no yield strategy is without exposure. This page sets out the protocol's material risks, and the structural measures taken to address them.
Smart-Contract & Infrastructure Risk
The risk. An exploit or failure of the on-chain infrastructure Syntetika is built on, Ember Protocol's vault contracts, or the Base network itself.
How it's contained. The vault and deposit contracts are Ember's infrastructure, independently audited by external security firms. Syntetika does not run custom vault code. These contracts hold only capital in transit: pending deposits and the redemption queue. Capital that has been deployed is not held there, it is either in transit as cbBTC through the SPV's segregated custody accounts at Utila, under whitelist and approval-policy control, or held as native Bitcoin fund-side by Hilbert. An exploit at the contract level therefore cannot reach deployed capital, though, as with any on-chain system, the underlying infrastructure is not risk-free.
cbBTC Wrapper Risk
The risk. cbBTC, the wrapped Bitcoin used for deposits and redemptions, loses its peg, suffers a liquidity dislocation, or fails at the contract level.
How it's contained. The strategy itself does not run on cbBTC. When capital is deployed, Hilbert converts cbBTC to native Bitcoin fund-side and trades on BTC directly, so a cbBTC de-peg does not affect how the strategy performs. The protocol does hold cbBTC at rest, before deployment and after redemption. This exposure is disclosed and isolated from strategy execution. cbBTC is Coinbase's wrapped Bitcoin, redeemable 1:1 with Coinbase, rather than a synthetic token. Conversion between cbBTC and BTC is performed fund-side, where execution quality is managed.
Pricing & Liquidity Risk
The risk. Transactions price at the most recent finalized NAV, which is always one strike behind the fund. Deposits and redemptions follow the cycle; a redemption requested today settles only after a strike and its finalization, so an exit can take a month or more end to end. In a drawdown, a redemption may execute at a published price that does not yet reflect the fund's most recent performance, in either direction.
How it's contained. This is a structural property of attested pricing, disclosed rather than engineered away. The cadence is fixed and public: strikes twice monthly, finalization 5–15 days later, and every transaction prices at a published, NAVC-attested figure. The protocol offers no instant liquidity against unattested prices; participants should size positions with the exit timeline in mind.
Service Provider Insolvency Risk
The risk. An operating company in the service stack, the curator, or a service provider, suffers insolvency or financial distress.
How it's contained. Capital does not sit with the operating companies. Capital in transit to or from the fund is held by SYNT (BVI) Ltd in segregated custody accounts at Utila. Deployed capital sits inside Hilbert Basis+. The curator holds capital only in transit at its own institutional custodian, and never holds the deployed investment. Because the SPV is a separate, Foundation-owned vehicle, the insolvency of a service provider does not reach capital held for participants, and outbound movement in any case requires whitelisted destinations and approval-policy sign-off.
Hilbert Strategy Risk
The risk. The delta-neutral basis strategy underperforms or loses value. Delta-neutral describes the strategy's posture toward Bitcoin's price, it does not mean returns are guaranteed. The strategy is exposed to basis compression, funding-rate moves, and market stress, and returns can be negative.
How it's contained. The strategy runs inside Hilbert's own risk framework, under hard limits that are monitored in real time and enforced by a dedicated Risk Officer independent of the trading desk. Among them:
a monthly stop-loss that caps portfolio drawdown;
a delta limit that holds the position close to market-neutral, so directional exposure to Bitcoin stays tightly bounded;
tail-risk and ruin limits that cap losses under extreme moves in price and volatility.
Breaches escalate immediately. The fund notifies its investors at a defined loss threshold, for capital routed through Syntetika. That notice reaches SYNT (BVI) Ltd as investor of record, and risk is reduced to zero if the hard stop is reached. Hard limits are treated as inviolable.
Exchange Counterparty Risk
The risk. A basis strategy holds its hedge on trading venues. If a venue fails, halts withdrawals, or becomes insolvent while positions are open, the short leg and any margin held there are exposed.
How it's contained. Venue exposure sits inside the fund, not with Syntetika. It is managed by Hilbert under the risk framework and hard limits described above, with positions monitored in real time. Syntetika does not select trading venues or hold positions with them; that function sits entirely with the fund manager.
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