# Risk Documentation

By using the Napier Protocol and Napier Interface, you accept the associated risks. This section outlines various risk categories for using the Napier Protocol & Napier Interface. Please be aware that this list is not comprehensive and may not capture all possible risks you may encounter.

* **Smart Contract Risk:** \
  Napier Finance undergoes rigorous security processes, but since it is based on smart contracts, there is a risk of unauthorized access or theft of funds if there are bugs or security flaws in the code, potentially exploited by malicious attackers.
* **Market Risk:** \
  Napier Finance allows the trading of yield tokens (YT) and principal tokens (PT), but the prices of these tokens are influenced by market demand and the overall trends in the cryptocurrency market. As a result, the value of invested assets may fluctuate with market changes.
* **Liquidity Risk:** \
  If demand for certain tokens or liquidity pools is low, it may be difficult to trade at the desired price. This could result in the inability to sell assets quickly.
* **Technical Risk:** \
  Napier Finance is a complex protocol, and users may risk losing assets if they make errors in operation. In particular, a lack of understanding regarding tokenization of yields or trading could lead to unexpected losses.
* **Regulatory Risk:** \
  Cryptocurrency regulations vary by country or region, and there is a possibility that regulations may become stricter in the future. This could lead to restrictions on the use of Napier Finance or trading of its tokens.
* **Counterparty Risk:** \
  Since Napier interacts with third-party curators, protocols and contracts, there is inherent risk associated with the smart contracts and systems deployed by the third-party protocols. Napier is not responsible for any funds lost due to exploits in third-party contracts.
* **Interface Risk:** \
  Napier Interface relays data from the Napier Protocol and displays it in an easily understandable way on the napier.finance domain. While it is carefully managed and operated, there is a risk that bugs, security flaws in the code, or human errors could lead to incorrect information being displayed or malicious links being inserted by attackers.
