> For the complete documentation index, see [llms.txt](https://docs.native.org/native-dev/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.native.org/native-dev/concepts/risks.md).

# Risks

## Smart contract risk

Although our smart contracts have undergone audits by third-party firms, it is theoretically possible for vulnerabilities to exist. Furthermore, integrated third-party projects, including utilities and listed token projects, may also present risks associated with smart contracts.

Mitigation:

* Engaging multiple professional third-party firms to audit smart contracts significantly mitigates the risk of vulnerabilities. Audit reports are available [here](/native-dev/resources/audits.md).
* Additionally, we implement a bug bounty program to incentivize individuals to identify vulnerabilities in our live code, serving as an additional measure to filter out potential issues.
* We meticulously evaluate any new tokens or utilities that we choose to list and utilize, collaborating exclusively with those that have undergone auditing and demonstrated a proven track record of robust security.

## Native Pool market and liquidity risk

The value of assets held in Native Pool can change with market prices. Yield is variable and depends on product activity, including demand for capital and trading activity.

**USD Value Loss of Deposited Assets:** The value of your deposited assets may decline in terms of USD due to price drops.

**Risk of Bad Debt:** In highly volatile or extreme market conditions, liquidation mechanisms may not execute as intended. Rapid price movements or network congestion can result in undercollateralized positions and potential bad debt.

Mitigation:

* Several automated risk monitoring mechanisms have been implemented throughout the system to maintain operational integrity.
* Conservative collateralization thresholds have been established to provide a sufficient buffer to counteract market volatility.
* Additionally, high-frequency, dynamic adjustments to the lending parameters have been instituted to ensure the system can promptly respond to any changes in market conditions.