> For the complete documentation index, see [llms.txt](https://docs.summer.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.summer.fi/legal/risks-of-using-our-products.md).

# Risks of using our products

## Risk Categories

**1. Smart Contract Risks**

• Potential vulnerabilities in the code could be exploited.

• Exploitation of code vulnerabilities may result in partial or total loss of funds, with no recourse for recovery.

• Risks from unaudited or newly deployed contracts.

• Interactions with external contracts that could inherit vulnerabilities.

**2. Market Risks**

• High volatility of underlying assets affecting position health.

• Liquidation risk due to rapid price declines or fluctuations.

• Collateral devaluation during market downturns.

**3. Liquidity Risks**

• Insufficient liquidity to withdraw or liquidate assets.

• Over-reliance on illiquid markets for collateral or borrowed assets.

**4. Governance Risks**

• Changes to protocol parameters that may impact user positions (e.g., interest rate changes).

• Exploitation of governance mechanisms leading to adverse outcomes.

**5. Oracle Risks**

• Dependency on accurate price feeds; potential manipulation or delays in updates.

• Malfunction or downtime of price oracle services.

**6. Operational Risks**

• Disruptions in the underlying infrastructure (e.g., node outages, network congestion).

• Risks tied to the user’s operational setup, such as wallet mismanagement or errors in execution.

**7. Regulatory Risks**

• Legal uncertainty around DeFi activities in various jurisdictions.

• Potential changes in regulatory frameworks impacting the ecosystem.

**8. Tax Risks**

• Uncertainties or non-compliance with tax regulations across jurisdictions.

• Risks of double taxation, conflicts between jurisdictions, and misclassification.

• Incorrect tax treatment could lead to penalties or financial losses.


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