> ## Documentation Index
> Fetch the complete documentation index at: https://docs-staging.centuari.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Risks

> Understanding the risks involved in using Centuari and how the protocol mitigates them

## Overview

DeFi protocols involve inherent risks. While Centuari implements multiple safeguards, users should understand these risks before participating.

## Smart Contract Risk

Smart contracts may contain bugs or vulnerabilities that could lead to loss of funds.

**Mitigations:**

* Multiple independent security audits
* Open-source code for community review
* Active bug bounty program
* Formal verification of critical components
* Timelock on protocol upgrades

## Oracle Risk

Centuari relies on external price feeds to value collateral and trigger liquidations. If an oracle provides incorrect data, it could result in improper liquidations or under-collateralized positions.

**Mitigations:**

* Decentralized oracle solutions (Chainlink)
* Multiple oracle sources with fallback mechanisms
* Circuit breakers for extreme price deviations
* Governance-managed oracle configuration

## Collateral Risk

Collateral assets can lose value rapidly, potentially leading to under-collateralized positions and bad debt.

**Mitigations:**

* Conservative loan-to-value (LTV) ratios per asset
* Liquidation thresholds with safety margins
* Real-time health factor monitoring
* Tiered collateral categories based on asset risk profile
* Automatic liquidation mechanisms

## Liquidity Risk

The order book may have insufficient liquidity for large orders to fill promptly. During periods of market stress, liquidity may decrease.

**Mitigations:**

* Idle Yield Router keeps capital productive while waiting for matches
* LP incentive programs to attract market makers
* Partial fill support for large orders
* Cross-chain liquidity aggregation increases available capital

## Bridge and Network Risk

Cross-chain deposits involve bridging assets, which introduces additional smart contract and network risks.

**Mitigations:**

* Only established, audited bridge protocols are supported
* Governance review required before adding new networks
* Settlement on Arbitrum for low fees and fast finality
* Monitoring systems for bridge health and delays

## Maturity Risk

Fixed-rate positions have defined maturity dates. Borrowers who fail to repay or refinance at maturity face liquidation. Lenders who do not enable auto-rollover must manually manage position expiry.

**Mitigations:**

* Auto-rollover for lenders (enabled by default in Easy Mode)
* Auto-refinance for borrowers (enabled by default in Easy Mode)
* Grace periods before liquidation at maturity
* Dashboard notifications and alerts before maturity
* Multiple active maturity dates to choose from

## Risk Parameters

Centuari maintains risk parameters that are regularly reviewed:

| Parameter             | Purpose                                        |
| --------------------- | ---------------------------------------------- |
| LTV Ratio             | Maximum borrowing power per collateral type    |
| Liquidation Threshold | Point at which positions become liquidatable   |
| Liquidation Penalty   | Fee charged on liquidated collateral           |
| Health Factor         | Real-time safety metric for borrower positions |
| Protocol Reserve      | Fund to cover potential bad debt               |

## User Responsibility

Users are responsible for:

* Understanding the risks before depositing funds
* Monitoring their positions, especially health factors for borrowers
* Managing maturity dates and auto-feature settings
* Keeping collateral ratios at safe levels