Oracle Risk
Options on HyperQuote use a commit-reveal oracle mechanism for settlement price determination. The settlement price is published by a designated trusted publisher and determines whether options expire in-the-money (ITM) or out-of-the-money (OTM). This introduces oracle-specific risks that are unique to the options product.
Trusted Publisher Model
The OptionsEngine contract designates a single oracle publisher address that is authorized to submit settlement prices. This is a trusted publisher model, not a decentralized oracle network.
| Property | Description |
|---|---|
| Publisher address | Set by the contract admin |
| Publish mechanism | On-chain transaction calling the settlement price function |
| Price format | USD price per unit of underlying asset |
| Timing | Published daily at or after 08:00 UTC expiry |
The settlement price is determined by a single trusted publisher. If this publisher submits an incorrect price, options will settle at the wrong value. There is no decentralized validation or dispute mechanism in the current design.
Publish Failure Risk
If the oracle publisher fails to submit a settlement price within the settlement window, ITM options cannot be settled. Consequences include:
- Missed settlement — If no price is published within the 24-hour settlement window, options expire without settlement. Collateral is returned to the seller.
- Keeper inaction — Even if a price is published late, keepers may not be monitoring, further delaying settlement.
- Position holder loss — A holder of an ITM option that cannot be settled due to missing oracle data loses the intrinsic value.
Potential causes of publish failure:
- Publisher infrastructure downtime
- HyperEVM network congestion preventing transaction inclusion
- Publisher key compromise requiring emergency rotation
- Bugs in the publish automation
Price Manipulation Risk
Because the settlement price comes from a single publisher, the system is vulnerable to deliberate or accidental price manipulation:
- Deliberate manipulation — A compromised publisher could submit a price that benefits specific positions at the expense of others.
- Accidental error — A bug in the price feed aggregation could produce an incorrect price (e.g., a stale price, a price from the wrong timestamp, or a price in the wrong denomination).
- Frontrunning the publish — If the settlement price can be observed before it is submitted on-chain (e.g., from the publisher’s pending transaction in the mempool), an attacker could trade options or exercise positions based on advance knowledge of the settlement price.
Timing Risk
The oracle price is supposed to reflect the market price at a specific moment (the expiry timestamp, 08:00 UTC daily). However, the actual publish transaction may occur minutes or hours later. This creates timing risk:
- The published price may not perfectly reflect the instantaneous price at 08:00 UTC if the data source lags.
- Between the expiry time and the publish time, the market price may have moved significantly. Participants cannot act on this movement for their expiring options.
- The choice of price source (e.g., which exchange, which aggregation method) affects the final number and is determined by the publisher, not the protocol.
In the commit-reveal oracle design, the publisher first commits a hash of the price, then reveals the actual price in a second transaction. This prevents frontrunning of the settlement price between commit and reveal.
Mitigation Strategies
- Understand the trust assumption — Options trading on HyperQuote requires trusting the designated oracle publisher. If you are not comfortable with this trust model, consider limiting your options exposure.
- Monitor settlement — Track the oracle publish schedule and verify that settlement prices are published on time. If the publisher has been unreliable, reduce your options exposure.
- Manage position size — Do not take options positions so large that a single oracle failure or manipulation would result in unacceptable losses.
- Verify settlement prices — After the oracle publishes, compare the settlement price against independent market data sources to confirm it is reasonable.
Related Pages
- Risk Overview — High-level risk summary
- Settlement & Expiry — Options settlement lifecycle
- Keeper Fees (Options) — Keeper incentive mechanism