# Risk Documentation

By using the **Napier Protocol** and **Napier App**, you acknowledge and accept the associated risks.\
This section outlines the main categories of potential risks; however, it is **not exhaustive**. You may encounter risks that are not described below.

### Risk Categories

#### 1. Smart Contract Risk

Napier undergoes rigorous security processes, but as it is built on smart contracts, there remains a possibility of **unauthorized access or loss of funds** due to unforeseen bugs or vulnerabilities exploited by malicious actors.

#### 2. Market Risk

The prices of Yield Tokens (YT) and Principal Tokens (PT) are influenced by market demand and broader crypto market trends. Consequently, the **value of your holdings may fluctuate**, and returns are not guaranteed.

#### 3. Liquidity Risk

Low demand for certain tokens or liquidity pools may lead to **difficulty executing trades at desired prices**, resulting in delays or losses when selling assets.

#### 4. Technical / Operational Risk

Napier is a complex protocol. **User error or insufficient understanding** of yield tokenization or trading mechanics may result in **unexpected losses**. Proper understanding of the system is essential before interacting with it.

#### 5. Regulatory Risk

Cryptocurrency regulations differ across jurisdictions and may change over time. Future regulatory developments could **restrict the use of Napier Finance or its associated tokens** in certain regions.

#### 6. Counterparty Risk

Napier interacts with **third-party curators, protocols, and smart contracts**. Any vulnerabilities or exploits in these external systems could lead to losses. Napier is **not responsible** for losses originating from third-party protocol failures.

#### 7. Interface Risk

The Napier App (app.napier.finance) displays data retrieved from the Napier Protocol. While carefully managed, **bugs, code vulnerabilities, or human errors** could result in **incorrect information** or **malicious links** being shown due to external attacks.

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### Before You Use Napier

To mitigate potential risks, users are encouraged to:

* Review the official documentation and risk disclosures
* Test with small amounts before committing larger positions
* Verify contract addresses via official repositories
* Understand the risks of any third-party integrations
* Stay informed on applicable regulations and tax obligations

> This section is for informational purposes only and does not constitute financial advice.\
> All users interact with the Napier Protocol **at their own risk**.