FAQ

General Questions

What is SaucerHedge?

SaucerHedge is a DeFi protocol that automatically protects liquidity providers from impermanent loss on SaucerSwap V2. It uses AI-powered automation through Lit Protocol's Vincent framework to manage hedged positions while you maintain full control of your assets.

How is this different from regular liquidity provision?

Regular LP:

• You provide liquidity and earn fees

• You suffer full impermanent loss

• Manual management required

• No downside protection

SaucerHedge:

• You provide liquidity and earn fees

• IL is hedged via short positions (~85% protection)

• Automated management via Vincent

• Non-custodial with full user control

Is my money safe? Do you have custody?

No, we never have custody of your funds. Assets are held in your PKP (Programmable Key Pair) vault, which you control through your wallet. Vincent abilities can only execute actions within the scope you define, and you can revoke permissions anytime.

What is Vincent / Lit Protocol?

Vincent is Lit Protocol's framework for non-custodial automation. It allows smart contracts to execute on your behalf WITHOUT you giving up control of your assets. You define what Vincent can do (the "scope"), and it operates only within those boundaries.

How It Works

How does the hedging work?

SaucerHedge splits your deposit:

• 79% goes to SaucerSwap V2 as concentrated liquidity

• 21% is used as collateral for a short position on Bonzo Finance

When the asset price drops, your LP loses value but your short position gains, offsetting the loss. When price rises, your LP gains but short loses - also offsetting.

What is impermanent loss?

Impermanent loss is the opportunity cost of providing liquidity versus just holding your tokens. It occurs when the price ratio changes from when you deposited. See our detailed explanation.

Why 79% / 21% split?

This ratio is mathematically optimized based on:

• Hedge effectiveness

• Liquidation safety margins

• Capital efficiency

• Leverage ratios (2x standard)

The math is derived from Uniswap V3 concentrated liquidity formulas. See Hedging Mathematics.

What happens if the price goes outside my range?

Vincent automatically closes your position when price approaches the boundary (within 5% buffer). This prevents you from suffering unhedged IL when all liquidity has been swapped to one asset.

You can also set auto-close triggers in your settings.

How often does rebalancing happen?

Vincent monitors your position every 5 minutes and rebalances when:

• IL deviation exceeds 2% from target

• Significant volatility change detected

• Health factor drops below safe threshold

Typical frequency: Once every 3-7 days for moderate volatility pairs.

Costs & Fees

What are the fees?

Transaction Fees (paid to Hedera):

• Position opening: ~$0.0003

• Rebalancing: ~$0.0002

• Position closing: ~$0.0003

Protocol Fees (paid to SaucerHedge):

• 10% of trading fees earned

• No performance fees

• No deposit/withdrawal fees

• No management fees

Example: If you earn $100 in trading fees, you keep $90 and SaucerHedge takes $10.

Why are Hedera fees so low?

Hedera uses a unique consensus mechanism (Hashgraph) that's extremely efficient, resulting in predictable, fixed fees around $0.0001 per transaction. Compare this to Ethereum's $50-200 per transaction!

Are there any hidden costs?

No hidden costs. All fees are:

• Displayed before transactions

• Recorded on-chain

• Logged to Hedera Consensus Service

• Visible in your audit trail

What's the minimum deposit?

Technical minimum: ~$100

Recommended minimum: $1,000

Why? Smaller amounts mean fees eat a larger percentage of returns. With $100 and $0.05 in monthly fees, that's 0.6% vs 0.005% for $10,000.

Risks & Safety

What are the risks?

1. Smart Contract Risk - Bugs in code could lead to loss (mitigated by audits)

2. Liquidation Risk - Short position could be liquidated if volatile (monitored by Vincent)

3. Oracle Risk - Price feed manipulation (using Chainlink + Pyth)

4. Market Risk - Extreme volatility may exceed hedge capacity

5. Bonzo Risk - Issues with Bonzo Finance lending protocol

Can I lose money?

Yes, like any DeFi investment you can lose money through:

• IL that exceeds hedge protection (rare, <15% of IL)

• Trading fee earnings less than costs

• Liquidation of short position (prevented by Vincent)

• Smart contract bugs (mitigated by audits)

However, SaucerHedge significantly reduces IL risk compared to unhedged LP positions.

What if I get liquidated?

Vincent prevents liquidation by:

1. Monitoring health factor every 5 minutes

2. Adding collateral if factor drops below 1.5

3. Reducing leverage if needed

4. Alerting you if manual action required

5. Auto-closing position before liquidation at 1.35

Liquidation threshold is 1.25, so you have multiple safety margins.

What if SaucerSwap or Bonzo has issues?

SaucerSwap issues: Your LP position is on SaucerSwap's contracts, not ours. You can always withdraw directly from SaucerSwap if needed.

Bonzo issues: Vincent can close your short position immediately and return assets to your PKP vault.

SaucerHedge issues: You maintain full control via your wallet. You can:

• Revoke all PKP permissions

• Withdraw from LP directly

• Close short position on Bonzo

• All without SaucerHedge interface

Technical Questions

What blockchain does this use?

SaucerHedge runs on Hedera, a public distributed ledger that uses the Hashgraph consensus algorithm. Hedera offers:

• Near-instant finality (~3-5 seconds)

• Predictable low fees ($0.0001)

• High throughput (10,000+ TPS)

• Energy efficient (carbon negative)

• Fair ordering (no MEV)

What is a PKP?

PKP = Programmable Key Pair. It's a wallet controlled by Lit Protocol that can execute transactions programmatically while you maintain ultimate control through your connected wallet. Think of it as a "smart wallet" that you program.

Do I need to understand smart contracts?

No! The interface handles everything. However, understanding the basics helps you make better decisions. We provide:

• Simple UI for all operations

• Plain language explanations

• Detailed tooltips

• Visual guides

What programming languages are used?

• Smart Contracts: Solidity ^0.8.20

• Frontend: TypeScript + Next.js + React

• Vincent Abilities: TypeScript

• Backend: Node.js + TypeScript

Can I build on top of SaucerHedge?

Yes! The protocol is composable. You can:

• Integrate SaucerHedge positions in your app

• Build custom Vincent abilities

• Create automated strategies

• Use our SDK

See Developer Guide.

Usage Questions

Can I withdraw anytime?

Yes! You can close your position anytime:

1. Go to position details

2. Click "Close Position"

3. Confirm transaction

4. Receive assets in ~10 seconds

Note: Closing costs one transaction fee (~$0.0003).

Can I add more liquidity to an existing position?

Yes! Use the "Add Liquidity" feature:

1. Position details → "Add Liquidity"

2. Enter amounts

3. Vincent recalculates optimal split

4. Confirm transaction

Your hedge ratio is automatically maintained.

What if I want to stop automation but keep the position?

You can pause Vincent:

1. Vault settings → "Pause Automation"

2. Keep your position active

3. Manual management required

4. Resume automation anytime

Can I change my delegation scope?

Yes! Modify anytime:

1. Vault settings → "Edit Delegation"

2. Update parameters

3. Sign with your wallet

4. New scope takes effect immediately

Note: Position-related changes may require closing and reopening.

What happens to my fees?

By default, fees are auto-compounded into your position. You can also:

• Collect fees to wallet

• Set custom collection schedule

• Disable auto-compounding

Can I have multiple positions?

Yes! You can have multiple hedged positions:

• Same pair, different ranges

• Different pairs

• Different strategies

• All managed from one dashboard

Each position is independent with its own hedge.

Supported Assets

What token pairs are supported?

Any SaucerSwap V2 pair! Popular options:

• HBAR/USDC ⭐ Most popular

• HBAR/USDT

Can I use HTS tokens?

Yes! SaucerHedge has full HTS (Hedera Token Service) integration through our HTSAdapter. Native HTS tokens work seamlessly.

What about stablecoins?

Stablecoin pairs (USDC/USDT) have minimal IL risk, so hedging isn't beneficial. SaucerHedge works best with volatile pairs.

Can I request support for a specific pair?

Yes! Join our Discord and suggest pairs. We monitor:

• Trading volume

• Liquidity depth

• Community demand

• Volatility metrics

Comparison Questions

How is this better than just holding?

Holding: Zero risk, zero reward LP without hedge: High reward, high IL risk SaucerHedge: Good reward, low IL risk

Example: HBAR drops 30%

• Hold: -30%

• LP: -35% (with IL, before fees)

• SaucerHedge: -32% (after IL hedge + fees)

Plus you earn trading fees!

How does this compare to UniHedge?

SaucerHedge is inspired by UniHedge but adapted for Hedera:

Feature	UniHedge	SaucerHedge
Network	Ethereum	Hedera
DEX	Uniswap V3	SaucerSwap V2
Lending	Aave	Bonzo Finance
Tx Cost	$50-200	$0.0003
Automation	Manual	Vincent (Lit)
Custody	Required	Non-custodial
Audit Trail	On-chain only	HCS immutable

What about IL insurance?

IL Insurance:

• Pay premiums (2-5% annually)

• Coverage limits

• Centralized provider

• Claims process required

SaucerHedge:

• No premiums

• Earn fees while protected

• Decentralized

• Automatic protection

How does this compare to Gamma Strategies or Charm?

Gamma and Charm provide automated LP management but NOT IL hedging. SaucerHedge does both:

• Automated rebalancing (like Gamma/Charm)

• IL hedging via shorts (unique to SaucerHedge)

• Non-custodial (like Gamma/Charm)

Support & Community

How do I get help?

1. Documentation: Coming Soon

2. Github: discord.gg/saucerhedge

3. Twitter: @SaucerHedge

Average response time: <24