> For the complete documentation index, see [llms.txt](https://h20finance.gitbook.io/h20-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://h20finance.gitbook.io/h20-docs/security-and-risk-management/risk-management.md).

# Risk Management

## No Private Key or Bot Risk

* Traditional: Bots require private keys exposed to the internet, vulnerable to hacks.
* CEX: Must trust exchange with custody of funds.
* Our Solution: 100% on-chain, no private keys in bots, self-custody maintained.

## Technical Infrastructure

* Traditional: Must maintain own servers, APIs, and monitoring systems.
* CEX: Reliant on exchange uptime and API stability.
* Our Solution: Runs on blockchain, no additional infrastructure needed.

## Transparency

* Traditional: Limited visibility into bot operations.
* CEX: Opaque internal processes.
* Our Solution: 100% transparent and verifiable on-chain.

This approach essentially removes many of the operational risks associated with traditional market making while maintaining full custody control of assets. Mathematical rules are enforced by smart contracts rather than relying on manual oversight or third-party systems.

## Strategy Specific Risk Management

* Human and system monitoring of position sizes and exposure.
* Readjustment of orders based on accumulated positions.
* Built-in fast exit functionality for risk mitigation during extreme market conditions.
* Self-adjusting averages to maintain profitable spreads while providing consistent liquidity.


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