Hercules V3
Hercules V3 is a concentrated-liquidity AMM on Metis with manual ranges and automated range management. Hercules states that an out-of-range position becomes only the lower-value asset and stops earning fees. The 2026-08-16 survey measured about $0.17M. We reject this adverse-rebalancing exposure under the version-1 AMM-LP dossier; higher capital efficiency, spNFT incentives and automated ranges change returns and control but not the underlying inventory.
- Ships a product line without impermanent-loss exposure that merits its own review
Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-16.
The research file
Mechanism applicability
V3 LPs allocate a token pair inside a chosen price range. Manual mode leaves range selection to the user; Auto mode adjusts ranges and wraps the LP into an spNFT that can receive trading fees, farming rewards and Nitro incentives. Hercules warns that crossing a range boundary converts the position entirely into the lower-value asset and suspends fee generation.
Control and exit applicability
The LP controls manual range selection or delegates range adjustment through Auto mode, while pool contracts execute swaps and position accounting. Withdrawal occurs from the positions page; an spNFT adds a separate wrapper step around the LP. Returned assets reflect completed trades and current range composition, so manager, contract, token, slippage and Metis liquidity remain exit dependencies.
Current observation and perimeter
The DefiLlama API read on 2026-08-16 classified Hercules V3 as a DEX and reported approximately $0.17M entirely on Metis. This application covers measured V3 liquidity rather than Hercules V2 pools, TORCH/xTORCH, plugins or standalone incentive tokens.
Why the class rule decides
Manual and automated Hercules positions remain paired market-making inventory and can end as a single weakening asset. Automation may reduce operational burden but cannot remove the AMM loss channel. The version-1 AMM-LP dossier therefore controls; reopen only for a separately measured product without paired-liquidity exposure.
Class rule
The amm lp class is outside the approved structures, so every protocol in it is not approved until the rule changes. The rule is about the structure, not an adverse finding about this protocol, and it is not a client instruction. The events that would reopen it are listed with the memo.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Hercules Docs — V3 liquidity and farming FAQ · primary · accessed 2026-08-16
Supports: concentrated ranges, single-asset outcome, manual and auto modes, spNFT, withdrawal - Hercules Docs — protocol introduction · primary · accessed 2026-08-16
Supports: Metis deployment, DEX identity, protocol perimeter - Hercules Docs — liquidity pools · primary · accessed 2026-08-16
Supports: LP positions, paired assets, fee generation, position management - Hercules Docs — contracts and security · primary · accessed 2026-08-16
Supports: contract perimeter, security dependencies, Metis deployment - DefiLlama — Hercules V3 survey record · secondary · accessed 2026-08-16
Supports: current TVL, Metis perimeter, DEX category
Inherited controls
The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.
| Chain | Verdict | Control | Control constraint |
|---|