How Does Valantis STEX Work?
Valantis STEX is a next-generation decentralized exchange on Hyperliquid's HyperEVM, specifically designed for trading liquid staking tokens like stHYPE. It uses a novel modular architecture with MEV-resistant order execution (HOT AMM) and a custom bonding curve optimized for staked assets. With ~$16M TVL and $7.5M in seed funding, it recently acquired the stHYPE liquid staking platform.
TVL
$17M
Sector
DEX
Risk Grade
C+
Value Grade
D+
Core Mechanisms
4.1.4
NovelSTEX — a custom AMM bonding curve designed specifically for liquid staking tokens (stHYPE, kHYPE) with pricing optimized for correlated assets
Novel AMM curve designed for LST-native liquidity — aims to reduce IL and provide better execution for staked asset swaps
4.1.3
Stableswap-like low-slippage mechanics for correlated LST pairs (stHYPE/HYPE)
Similar to Curve's approach for pegged assets but specialized for liquid staking tokens
3.4.2
stHYPE liquid staking token integration (acquired stHYPE platform) providing reward-bearing LST liquidity
Valantis acquired stHYPE to vertically integrate liquid staking with DEX — stHYPE represents staked HYPE
2.1.2
Percentage-based swap fees on LST pair trades distributed to liquidity providers
Standard fee model applied to LST-specific pools
5.4.1
Team-controlled protocol parameters during early stage with modular upgrade capability
Early-stage multisig control typical for new protocols
4.4.3
NovelHybrid Order Type (HOT) AMM module providing MEV-resistant order execution to protect LPs from toxic flow
HOT AMM is a novel MEV-protection mechanism using off-chain signers to filter toxic from non-toxic order flow
How the Pieces Interact
If stHYPE depegs from HYPE (e.g., during mass unstaking), the STEX curve optimized for correlated assets will produce unexpected slippage and IL for LPs
Off-chain signers in HOT AMM create a semi-trusted layer — if signers collude or go offline, MEV protection fails and LPs are exposed to toxic flow
Vertical integration of LST and DEX creates concentrated counterparty risk — a flaw in stHYPE directly impacts DEX liquidity and vice versa
Modular upgrades controlled by team multisig could introduce vulnerabilities through new modules without sufficient community oversight
Novel AMM curve combined with novel MEV protection creates compound novelty risk — interaction effects between two untested systems are unknown
What Could Go Wrong
- STEX is a novel AMM design specific to staked assets with no comparable precedent — untested edge cases under market stress
- Modular architecture increases composability but also expands the smart contract attack surface through module interactions
- Single-chain dependency on Hyperliquid L1 (HyperEVM) which is itself a relatively new chain
stHYPE Depeg Breaking STEX AMM Curve
ModerateTrigger: Mass unstaking event on Hyperliquid causes stHYPE to trade significantly below HYPE, pushing STEX curve beyond its designed operating range
- 1.Market downturn or Hyperliquid governance event triggers mass stHYPE unstaking requests — Unbonding queue fills, stHYPE cannot be redeemed at par in the short term
- 2.stHYPE trades at discount to HYPE on secondary markets including STEX — STEX curve, optimized for correlated assets, produces unexpected high slippage
- 3.LPs in STEX pools suffer outsized impermanent loss as the curve is poorly calibrated for depeg — LPs rush to withdraw, reducing pool depth further
- 4.Thin liquidity amplifies the depeg as sellers cannot exit stHYPE positions — stHYPE discount widens beyond fundamental value, creating panic
- 5.Valantis protocol TVL drops as its primary asset (stHYPE) loses confidence — Vertical integration backfires — DEX and LST both suffer simultaneously
Risk Profile at a Glance
Overall: C+ (36/100)
Lower score = safer