Third-Party Protocol Risk
hBTC relies on integrations with external protocols that are not controlled by Hermetica. These third-party dependencies are critical to strategy execution and asset movement and introduce risks outside the direct control of the hBTC protocol.
Zest Protocol
hBTC integrates with the Zest Protocol to access money market infrastructure for collateralized lending against sBTC.
Risks associated with reliance on Zest include:
Protocol-specific risk: Vulnerabilities, design flaws, or economic failures within Zest could result in loss of funds, impaired liquidity, or forced position unwinds.
Liquidation and oracle risk: Adverse price movements, oracle failures, or parameter changes may increase liquidation risk or affect borrowing conditions.
Governance and upgrade risk: Changes to Zest’s contracts, risk parameters, or governance decisions may impact hBTC strategy execution.
Operational dependency: Downtime, degraded performance, or paused functionality could disrupt protocol operations.
Additional information on Zest is available at:
Website: https://zestprotocol.com
Documentation: https://docs.zestprotocol.com
sBTC Decentralized Bridge
hBTC also depends on the sBTC decentralized bridge to enable the movement of Bitcoin between Bitcoin L1 and the Stacks ecosystem.
Risks associated with the sBTC bridge include:
Bridge security risk: Failures, vulnerabilities, or signer coordination issues could impair minting or redemption of sBTC.
Cross-chain dependency: Delays or disruptions in Bitcoin or Stacks network operations may affect bridge functionality.
Governance and operational risk: Changes to bridge parameters, signer sets, or operational processes may impact availability or performance.
The sBTC bridge is governed independently and introduces risks that are external to the hBTC protocol.
Additional information on sBTC is available at:
Website: https://www.stacks.co/sbtc
Documentation: https://docs.stacks.co/learn/sbtc
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