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

# Understanding the Risks

As with any DeFi protocol, investing in Liquidex carries risk. We believe in **full transparency** — here is a clear picture of the risks and how the protocol works to mitigate them.

***

## Compliance risk

* Tokenized stock assets are **permissioned** and **restricted to non-US users**
* Issued by **Robinhood Assets (Jersey) Ltd** — subject to their terms & availability
* You are responsible for ensuring you are **eligible** to hold these assets in your jurisdiction

{% hint style="warning" %}
The DeFi layer is permissionless, but the **underlying tokenized assets** carry these restrictions.
{% endhint %}

***

## Market & execution risk

Fast block times (\~100ms) can create opportunities for **Maximal Extractable Value (MEV)** and slippage. The protocol mitigates these with:

| Mitigation               | Detail                                   |
| ------------------------ | ---------------------------------------- |
| **Strict slippage caps** | Enforced on all rebalancing transactions |
| **Default maximum**      | **2% slippage** limit                    |

{% hint style="info" %}
These safeguards protect your capital from adverse price movements during execution.
{% endhint %}

***

## Oracle risk

The protocol relies on **Chainlink oracle heartbeats** for asset pricing:

| Parameter                 | Detail                                                     |
| ------------------------- | ---------------------------------------------------------- |
| **Update cadence**        | Roughly every **24 hours** or upon **0.5% deviation**      |
| **Staleness guard**       | Strict staleness thresholds prevent use of outdated prices |
| **During unusual events** | Feeds may pause and report their **last good value**       |

{% hint style="warning" %}
The protocol enforces strict thresholds so **outdated prices are never used** for critical operations.
{% endhint %}

***

## A final note

Please **do your own research** and only invest what you can afford to lose. DeFi protocols, tokenized assets, and digital assets involve **substantial risk**.

{% hint style="danger" %}
Liquidex is provided on an **"as is"** basis. This documentation is for **informational purposes only** and does **not** constitute financial advice.
{% endhint %}


---

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