# DrawdownCap

> A limit down. The pool may not fall more than a fixed distance below where the current epoch opened, and the limit resets on a schedule rather than on anyone's say-so.

A production Uniswap v4 hook. Source: https://github.com/nirholas/drawdown-cap. Part of the HookForge catalogue: https://hookforge.pages.dev

## How it works
{CircuitBreakerHook} is symmetric and reactive: a violent move in either direction halts the pool, then the halt clears. This is the other shape, and it is the one commodity and equity venues actually use. It is asymmetric, because a collapse and a rally are not the same event for the people holding the asset. It is a hard cap rather than a trigger, so the fall never happens rather than being noticed after it did. And it resets on a clock, so everyone can see in advance when selling reopens and at what level.   allowed while  openTick - tick <= maxFallTicks,  where openTick is the tick at the start of the epoch Buying is never restricted. A pool at its limit can still be bid up, and doing so does not raise the limit for that epoch, because the reference is the epoch's opening price and not a running high. When the epoch rolls, the pool takes its current price as the new opening and gets a fresh allowance. As with {RatchetFloorHook}, the cap is expressed as a price a router can trade into: {sqrtPriceLimitDownX96} returns the value to pass as a swap's `sqrtPriceLimitX96`, so a seller fills as far as the cap allows and stops there. The `afterSwap` revert is the backstop for callers that pass no limit. Liquidity operations are never blocked, so nobody is trapped by a limit-down epoch. One tick is one basis point to within rounding, so `maxFallTicks = 1000` is a ten percent daily limit.

## Prior art
Trading halts and price bands are standard on regulated venues and absent on-chain, where the closest equivalents are governance pause switches and oracle-deviation guards. Hook implementations of trading hours exist. A scheduled, asymmetric, self-resetting limit down with no privileged role does not.

## Where it does not help
A limit down does not stop a decline, it defers one. If the market has genuinely repriced, the pool reopens each epoch and falls again, one limit at a time, and in the meantime the gap between the pool and the real price is an arbitrage that grows. It buys holders time to react, which is worth something, and it costs liquidity providers the trades they would rather have made, which is not free.

## Facts
Slug: drawdown-cap
Contract: DrawdownCapHook
Callbacks: afterSwap, beforeSwap, afterInitialize
Parameters: maxFallTicks (uint24), epochSeconds (uint32)
Dynamic fee required: no

## Caveats
- Unaudited.
- A deployment with status "deterministic" is a mined CREATE2 address with no code at it yet. Never present one as live.