# Risk

## **General Risks** <a href="#general-risks" id="general-risks"></a>

### **Legal Considerations**

Users must understand the legal implications of their activities within LiquidX.

### **Tax Obligations**

All tax-related outcomes from your transactions are your responsibility.

### **Market Fluctuations**

The volatile nature of market prices means they can shift rapidly without warning, and historical trends may not predict future movements.

### **Unforeseen Risks**

It's probable that there are additional risks not identified in this document.

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## **Solana Network Risks** <a href="#solana-network-risks" id="solana-network-risks"></a>

### **Wallet Security**

Loss of your wallet access results in an irreversible loss of funds stored in LiquidX.

### **Solana System Risks**

Past instances of network halts have temporarily disabled on-chain functionalities. These could recur, potentially with extended or permanent impacts, leading to a complete loss of funds.

### **Service Fluctuations**

The quality and timeliness of Solana's services may degrade, as evidenced by past occurrences.

### Network Congestion&#x20;

During periods of heightened network congestion or a complete network halt on the Solana blockchain, LiquidX expressly disclaims any liability for delays, failures, or interruptions in the provision of its services. Consequently, users may incur losses arising from, but not limited to, mispricing of assets or inability to execute transactions in a timely manner.

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## **Oracle Risks** <a href="#oracle-risks" id="oracle-risks"></a>

LiquidX relies on the Pyth oracle network for external price data feeds. Disruptions, inaccuracies, or manipulations affecting Pyth oracles may result in erroneous price information being provided to LiquidX. Such inaccuracies can adversely affect user transactions, potentially leading to unintended financial outcomes including the freezing or restriction of user accounts due to invalid oracle data.

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## **Token Risks** <a href="#token-risks" id="token-risks"></a>

The interaction with Solana tokens carries inherent risks, including potential depegging of bridged or stablecoin tokens, which might trigger unintended liquidations.

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## **LiquidX Specific Risks** <a href="#nx-finance-specific-risks" id="nx-finance-specific-risks"></a>

### **Program Vulnerabilities**

The underlying Solana program of LiquidX may contain exploitable bugs leading to a range of issues from minor to catastrophic, including total fund loss.

### **Security Council Decisions**

The Security Council, with delegated powers, can make rapid changes in response to security threats, potentially limiting platform functionality until a DAO vote can be conducted.

### **Margin Liquidations**

Engaging in margin positions carries the risk of liquidation due to market shifts.

### **Socialized Losses and Cascades**

Inefficient liquidations could result in negative equity, impacting even non-risky accounts, and large liquidations could trigger market movements leading to further liquidations.

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## **Service Dependencies** <a href="#service-dependencies" id="service-dependencies"></a>

LiquidX depends on various services for data scraping, event processing, and user interface hosting. Disruptions or compromises in these services could impact the platform's operation and user experience.

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## **Trading Risks** <a href="#trading-risks" id="trading-risks"></a>

### **Withdrawal Limitations**

Withdrawal of tokens might be restricted if not enough tokens are available in the vaults due to lending activities.

### **Interest Rate Variability**

Borrowing and depositing interest rates are subject to change based on token utilization, affecting returns.

### **Perpetual Market Risks**

Limited liquidity could hinder position exits, and significant, rapidly changing funding rates could impact trades.

### Smart Contract Risks&#x20;

The Solana mainnet inherently carries a material risk that smart contracts deployed thereon may be subject to exploitation or malicious attack. This risk is not limited to LiquidX but extends equally to other protocols including, without limitation, Meteora and PYTH. Users acknowledge and accept that such vulnerabilities may result in loss or compromise of assets.

### Liquidation Risk

Traders must fully understand and expressly accept the risk that their trading positions may be liquidated if the price of the relevant tokens moves adversely. Traders further acknowledge that liquidation events may not occur promptly or as anticipated, and LiquidX makes no representation or warranty guaranteeing timely liquidation under any circumstances.
