> For the complete documentation index, see [llms.txt](https://docs.realfi.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.realfi.co/risks-and-disclaimer/what-are-the-risks-of-using-the-realfi-protocol.md).

# What are the risks of using the RealFi protocol?

Participation in the RealFi protocol involves several categories of risk that prospective users should understand before participating.

* Smart contract risk is the possibility that the protocol's code contains undiscovered vulnerabilities that could result in loss of funds.
* Peg risk is the possibility that USDrf could deviate from its target value due to market stress or arbitrage failure.
* Reserve risk is the possibility that the underlying portfolio underperforms or experiences defaults that reduce the value of sUSDrf.
* Regulatory risk is the possibility that future regulatory developments affect the protocol's ability to operate in a jurisdiction or change the legal classification of the tokens.
* Liquidity risk is the possibility that redemption queues, market liquidity, or circuit breaker activations prevent timely exit.
* Counterparty risk is the possibility that protocol service providers, custodians, or borrowers in the underlying portfolio fail to perform their obligations.
* Technology risk is the possibility that protocol infrastructure, including the Cardano blockchain and supporting systems, experiences outages or failures.
* sUSDrf holders additionally absorb portfolio losses before USDrf holders are affected. USDrf and sUSDrf are not bank deposits and are not insured. Capital is at risk.