The Risk Protocol

RiskON is built to deliver ~2X on BTC or ETH. So we asked the obvious question: how does it compare against the way most traders actually hold 2X—a leveraged perpetual? As per our backtests, in every BTC and ETH bull market since 2020, 13 of 13, the perpetual finished behind RiskON. Here is the full study 🧵

Seven weeks of selling took BTC down 29% to 58.5K. A $281M short squeeze and five straight days of ETF inflows later, it is back near $64K, ETH is up 15% off its low, and no one can agree whether the bottom is in or $40K prints by Q4. Right now, that leaves three imperfect moves: hold the spot and sit through every drawdown; get into leveraged perps and get liquidated for being early; or rotate into stablecoins and miss the bounce if it comes. RiskON and RiskOFF are built for exactly this. RiskOFF puts a floor under the drawdown while keeping meaningful upside, so unlike stablecoins, you are protected without stepping out of the market. And the moment momentum turns clear, you swap RiskOFF for RiskON and ride the move at 2x. You no longer have to call the exact bottom. You only have to choose your risk appetite and change it when the market does. More on how you can dynamically switch between RiskON and RiskOFF to generate Alpha out of risk itself, rather than treat it as something to be avoided: riskprotocol.io/articles/risk-…

Here is how RiskON, built to deliver roughly 2X leverage, differs from a perp. With RiskON, there’s no funding clock running against you, no margin to manage, and no forced liquidation. Perps rely on funding payments to keep their price anchored to spot. In long-heavy markets, longs pay, and that cost compounds for as long as the position stays open. RiskON sources leverage differently: through a fully collateralized, costless collar with RiskOFF. RiskOFF receives protection against deeper losses in exchange for giving up gains beyond a certain point. RiskON takes the other side of that trade, receiving the surrendered upside and assuming the corresponding downside. Because the leverage comes from an internal risk swap rather than borrowing, there is no funding bill. And the difference compounds. Across the BTC and ETH bull markets identified over the last six years, RiskON beat the 2X perp in all 13 windows. Compounded across those markets, RiskON BTC delivered 2.9X the ending wealth of its perp counterpart. RiskON ETH delivered 4.4X. Leverage has a new home.

Since 2020, there have been 13 bull markets across BTC and ETH . $1 held through them in a 2X Perp became $18 on BTC and $22 on ETH. Meanwhile, spot ETH, with no leverage at all, became $27, which means 2X Perp earned less than buy-and-hold. The reason is the funding rate. A perpetual charges you to hold it, and the bill peaks exactly when you want the position most: longs paid 17% to 22% a year inside bull markets, and more than 70% in the 2021 boom. RiskON delivers ~2X from its costless-collar structure alone, so it pays no funding at all. The same $1 became $53 on BTC and $97 on ETH, with a shallower worst drawdown across all windows. The full research: riskprotocol.io/articles/the-l…

There is more in the full study. We reran the comparison every fair way we could think of, and RiskON still came out ahead. There is exactly one scenario where the perpetual wins, and it requires knowing the future. Leverage has a new home. riskprotocol.io/articles/the-l…

The extra return did not come with deeper pain. In every bull market in the study, RiskON's worst drawdown was shallower than the perpetual's—averaging 38% against 46% in BTC, and 42% against 51% in ETH. The reason is the structure: between its strikes, RiskON moves about one-for-one with the asset, so it takes the early, ordinary part of every dip at half a 2X perpetual's pace. One window shows it well—through the BTC bull market of October 2023 to August 2024, the perp ran ahead and peaked higher, then gave far more back on the pullback. RiskON finished in front with the shallower drawdown.

RiskON is built to deliver ~2X on BTC or ETH. So we asked the obvious question: how does it compare against the way most traders actually hold 2X—a leveraged perpetual? As per our backtests, in every BTC and ETH bull market since 2020, 13 of 13, the perpetual finished behind RiskON. Here is the full study 🧵

Vitalik Buterin recently published this post: Building index-tracking assets on top of options instead of debt (ethresear.ch/t/building-ind…). It lands almost exactly on what we are building. It helps to start with what @VitalikButerin is actually trying to achieve. His post is really about an old, hard problem: how do you build price-stable and index-tracking assets on-chain without trusting a central issuer? You want to give people exposure to something like the dollar using only a trustless asset, such as ETH, as backing. Every design like this has two sides. For everyone who is long, someone has to be short, and if the price moves far enough against the short side, the shorts go broke. The usual fix is liquidation: the system force-closes that position before the loss eats through the collateral. That fix is the real problem. To liquidate the moment a price is crossed, you need a feed that is fast and always right. As Vitalik puts it, "Real-time oracles are very hard to make safe." A fast feed cannot pause to be double-checked, and it is the easiest part of the system to attack. It is where a long line of collateral-backed stablecoins and lending markets have broken. His move is to change the building block from debt to options. He splits one unit of collateral into two complementary claims, which he calls P and N. P is the protected side, the one that behaves like the thing you actually want to hold, such as the dollar. N is the risk side that takes the other end of the trade. The two are built so that they always add back to the whole unit of collateral. Because P and N always sum to the collateral, no position can end up underwater, so there is nothing to force-close. Take away the liquidation, and the fragile real-time oracle goes with it. Settlement can be slow, and slow is safe. This incidentally is the same design architecture as our SMART Tokens. We do the same split. Deposit one asset, starting with BTC and ETH, and it becomes two tokens. RiskOFF is the calmer half: it gives up some upside in exchange for a floor under its losses. RiskON is the other half: it takes that downside and, in return, earns the extra upside. Put the two back together at any time, and you have your asset back. No loan, no margin, nothing to rescue. But here is where we differ. Vitalik favors a slow oracle, and to minimize increased exposure to the underlying as price ticks down, suggests that users independently rebalance prior to maturity. He acknowledges that such a design choice likely imposes potentially significant rebalancing costs that could potentially make the mechanism unworkable. We took a different tack. We favored abstracting the mechanics so that the product is something an ordinary user can simply hold and trade. We run it in repeating periods, called epochs, that reset on their own, with a safety barrier that ends a period early in a sharp crash, before the risk-taking side can fall below zero. That barrier is the trade-off: because it has to watch the price as it moves, our version leans on the oracle more than Vitalik's read-it-once design. We give up a little of that purity on purpose to achieve that abstraction. And in the process we solve for the rollover cost that Vitalik left unresolved. At the end of an epoch, users get automatically rolled over into a new epoch that resets the options at zero cost (the options are designed to be a costless collar). Our bounded, fully collateralized options turn risk into something you can safely hold, trade, and price. That is the piece DeFi has been missing. When the most credible architect in crypto independently arrives at the same thesis we have been working on, it tells us we are on the right track. RiskON and RiskOFF are only the beginning of what this design can do. We call the mechanism SMART, a Split Mechanism for Asset Risk-Tokenization, and the same split can produce a whole family of risk tokens: long-volatility and short-volatility tokens for trading swings directly, 10X Bull and -10X Bear tokens that give amplified exposure with no margin calls and no liquidations, yield-generating tokens, and tokens built for tail risk, across more assets over time. One mechanism, many shapes of risk…

You do not need to be a top trader to beat buy-and-hold. @Inomsxbt walks through our research: being right just over half the time in switching between RiskON and RiskOFF is enough to edge ahead. By being right 66% of the time, BTC traders could have more than doubled their return over the last three years. Round 3 of the Trading Competition is live now. Finish in the top 100 and earn Risk Points. The research shows what is possible. The Trading Competition is where you prove it. app.riskprotocol.io/dashboard

Tomorrow: Risk Roundtable, live on our Discord 🎧 The Risk Protocol team will walk you through our Risk Dashboard on screen—the data, the trends, and what is moving the market this week. 🗓️ June 23 · 1 PM UTC Bring your questions: discord.com/events/1445706…

Most trading competitions reward whoever took the most leverage and got lucky, meaning you are also just one blow-up from zero. The Risk Protocol is built on a different idea: risk is not something to be all in or completely out of; it is something to harness dynamically. Round 3 is LIVE. Your Final Score = 60% PnL and 40% Risk Management. So a steady gain you keep can beat a moonshot you gave back. You play it with SMART Tokens: RiskON to lean into a move, RiskOFF to step out of it. 30 days. $20,000 of free Testnet capital. Real skill. Climb the board and earn Risk Points. 👉 app.riskprotocol.io/dashboard

When the market falls, most people have only two choices: hold and watch their losses grow, or sell and lock in the loss permanently while watching the bounce back from the sidelines. @Inomsxbt explains why that is finally changing. We split your BTC or ETH into two tokens. Hold RiskON when you want more upside. Hold RiskOFF when you want protection. Switch between them whenever your outlook changes. So you are no longer stuck choosing between full risk or cash. You decide how much risk to take, and you can change it any time. Welcome to RiskFi.

Another round of @TheRiskProtocol Incentivized Testnet Trading Competition wraps today and a fresh one kicks off tomorrow. The Risk Protocol turns risk from something you avoid into something you exploit for Alpha. RiskON for ~2x leverage when you have conviction, RiskOFF to cap your losses at 5% when you do not, while still retaining meaningful upside. The competition is the fastest way to master that. You are not just reading about the primitive, you are trading it live alongside everyone chasing the same edge. Better yet, it pays you while you learn. Finish a round in the top 100 and you earn RISK Points. Stack them across rounds to climb the Risk Championship and earn even more on top. Fresh round, clean slate, everyone gets an equal shot tomorrow. Start here → app.riskprotocol.io/dashboard

Fourteen weeks of turning risk data into sharp, public calls. What a run. To everyone who pulled the data, made the trade, and showed their work, thank you. You turned our risk dashboards into a living library of real, accountable calls. Every week, the community got sharper, digging deeper into the charts, surfacing insights you could not find anywhere else, and challenging the wider crypto narrative. And what a way to close out this run. Congratulations to @Topboy__Truth, the final winner of the season. He did not lean on a single read. He combined three independent sources—fundamentals, technicals, and our dashboard risk metrics—and then he actually made the trade. He tied his reasoning directly to action: volatility rising and returns turning negative, so he rotated into RiskOFF to protect his capital. Signal, decision, proof. That is exactly what this was about. His full entry is linked below. Now we are taking RiskFi Insights back to the lab, pausing briefly to make the next season sharper and bigger. In the meantime, put these insights to work. Also, use the new simulator on our dApp to rotate between RiskON and RiskOFF, climb into the top 100 of our ongoing Trading Competition on Incentivized Testnet, and earn RISK Points: app.riskprotocol.io/dashboard

The Risk Roundtable kicks off this coming Tuesday 🎙️ A walkthrough of our Risk Dashboards—live risk data, the trends playing out this week, and how RiskON and RiskOFF are doing. TRP Founder and CEO @Karamvir_Gosal will go through the dashboards himself. Bring your questions. Be the trading wiz the rest of CT cannot be ✨ 🗓️Tuesday, June 16, 1:00 PM UTC Set a reminder 👇 x.com/i/spaces/1vJpP…