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

# Risks

Users should be aware of the risks of using Kairos, DeFi protocols in general. Below are some risks when using Kairos:

1. **Liquidation Risk:** If market rates move against your position or your collateral value drops, you could be liquidated and lose your collateral. You need to maintain sufficient collateral throughout the entire swap term and the current protocol does not support adding additional to an open swap.
2. **Interest Rate Risk:** You're exposed to rate movements over the swap term. If you're paying fixed and rates drop, or paying floating and rates rise, you'll face losses relative to simply holding your collateral.
3. **Smart Contract Risk:** Bugs, exploits, or vulnerabilities in the protocol code could result in loss of funds.
4. **Oracle Failure Risk:** The protocol depends on Chainlink and Pyth oracles for rate data. If oracles malfunction, provide stale data, are manipulated, or otherwise provide incorrect data, it could result in incorrect settlements or unfair liquidations.
5. **Counterparty Liquidity Risk:** If LP liquidity dries up, rates in the market may rise, or the market may become too thin to trade effectively.
6. **Underpayment Risk:** If the counterparty's collateral is not sufficient to cover the net payment owed, or if they are not liquidated when they should be, you may receive less funds than actually owed.

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