The Pulse: Crypto Risk Review - Uni4 hook exploits and restaking risks

September 2, 2025

Welcome to Crypto Risk Review, your concise and clear resource for quickly understanding and navigating crypto and DeFi market risks. Each edition provides a snapshot of critical risk factors and actionable insights derived from Sentora’s DeFi Risk platforms.

Gabriel Halm

TL;DR

High risk loans now above $12B
Liquidations stay elevated at $12.6M due to volatility
How to gauge Uniswap v4 hook exploits
Evaluating restaking risks of CAP Protocol
Featured Dashboard: Ethena Risk Radar

Risk Pulse and Radar Highlights

Euler v2 eUSDe Liquidity Volatility

Source: Euler v2 Pulse

Euler stablecoin markets that are primarily focused on Pendle PT looping have seen large fluctuations in liquidity as the September markets near maturity and further dated markets open up
The eUSDe market has seen multiple million dollar changes in liquidity in the past week as users have taken advantage of borrow rates lower than other stablecoin markets

Current Event Risks

Uniswap V4 Hook Troubles

With the launch of Uniswap v4 at the beginning of 2025, there was much fanfare on the new possibilities it could bring to DeFi via its hook implementations. The idea of micro-protocols that could all run different strategies yet tap into the same pools of liquidity offered the vision of reduced liquidity fragmentation and more experimentation on mechanisms implemented into AMMs. However exploits on hooks built on top of v4 have impeded the vision.

With the Cork exploit earlier this year and just today the exploit of Bunni, two of the largest protocols building on the Uniswap v4 hook system have suffered losses in the millions. This highlights some key points to consider when reviewing deployments into a hook based protocol:

Audits: Any hook-based service should always be viewed as a unique protocol and audits on their hook are essential.
Novelty: Many of these hooks are experimenting with highly novel mechanisms on a novel base layer (Uniswap v4). This increases the risk surface and introduces previously unknown attack vectors.
Complexity: Adding multiple smart contract layers adds complexity and increases risk surface as interactions between layers can create new exploitable pathways.
Auditors: With new novelty and complexity, a set of audit companies will likely start to specialize in hook implementations. Choice of auditors based on their hook smart contract experience will become more relevant.

Uniswap is actively improving this space with a grants program for audits and a hooks library to standardize some contracts. This space will likely continue to improve and see innovation that is secure and successful, but as for now it still remains a fairly novel space and users assessing deployment risks should adjust accordingly.

CAP Protocol and LRT Slash Exposure

CAP Protocol is a new innovation in the stablecoin space that creates a yield-bearing stablecoin that earns fees by lending out underlying backing capital to operators that perform strategies in DeFi to earn yields.

Source: DefiLlama

In its first month, the protocol has attracted $100M+ in deposits indicating interest in the DeFi ecosystem for this type of product. The protocol has also attracted much attention from restaking protocols as it is a protocol that plans to lease economic security from the restaking protocols.

The high lever overview of the mechanics are as follows:

CAP users deposit stablecoins (USDC) into the protocol
Onboarded operators can borrow stablecoins from CAP for DeFi strategies
In parallel, operators must secure collateral from restakers that is higher value than the borrows (overcollateralized)
Yields from operator strategies are paid to CAP protocol users, restakers, and the remaining kept by the operator
If there are losses or undercollateralization of the operator’s loan, restakers get slashed and the assets are redistributed to CAP users to make them whole

Source: CAP docs

While this design will finally open up much anticipated yield opportunities for restakers, it does hold many new risks that restakers and restaking protocols will need to consider. At its core, the loans to operators are essentially uncollateralized loans for the operator with restakers acting as a guarantor. This means if an operator decides to take a loan and disappear, the restakers could be on the hook for repaying the entirety of the loan. This would mean a large slash event to the restakers and for LRT protocols, a drop in LRT value that could have knock risks in DeFi such as liquidations in lending markets.

Economic security is likely going to be the main driver of yields to restaking protocols and the CAP design is a first step in that direction. However, restakers and specifically LRT holders will need to actively monitor the exposure they have and adjust their DeFi strategies according to the new slash exposure they face.

Feature Dashboard: Ethena Risk Radar

As one of the fastest growing stablecoins in the DeFi ecosystem, Ethena’s USDe is integrated into the largest protocols on Ethereum mainnet as well as other large blockchains. Many of the most common current strategies utilize USDe or its derivatives for yields. For users deployed into these strategies it is essential to monitor USDe risk signals relevant to their position.

Stability