> ## Documentation Index
> Fetch the complete documentation index at: https://docs.kimia.live/llms.txt
> Use this file to discover all available pages before exploring further.

# Risks

> The non-trivial risks of using Kimia, stated plainly.

Kimia is powerful, composable infrastructure. It is also financial software,
and financial software can lose you money. This page lists the risks we
consider material, read it before committing capital.

## Smart-contract risk

Kimia consists of six Anchor programs, five supporting crates, and third-party
integrations (Pyth, SPL Token, wSOL). Any of them can contain bugs.

* V1 is **unaudited** as of devnet. Mainnet launch is gated on formal audits.
* Even after audits, new interactions and on-chain conditions can expose
  previously-unknown behavior.
* We do not carry insurance on contract risk. If funds are lost due to a bug,
  recovery depends on admin intervention and governance consensus.

## Oracle risk

Kimia trusts Pyth Hermes price feeds:

* **Feed outage.** If Pyth publishers go offline long enough, Kimia
  instructions that require an oracle update will fail. Trading halts until
  publishers recover.
* **Feed manipulation.** Pyth uses a confidence-weighted median across
  publishers. Kimia enforces a 2.5% confidence cap, updates above that are
  rejected, but an adversary who corrupts enough publishers simultaneously
  could in principle push a price within the cap.
* **Staleness.** Kimia rejects prices older than 60 s. A replay of older
  data is impossible.

Mitigations: the confidence cap, the staleness threshold, and the fact that
liquidations run at oracle rather than mark.

## Funding-rate risk (delta-vault)

The delta-vault's expected return depends on sustained positive funding.

* **Negative funding.** In a sustained bear market, shorts can pay longs.
  The vault absorbs this with its insurance fund (seeded by 30% of positive
  funding historically), then with NAV.
* **Auto-pause.** If the insurance fund is depleted **and** funding has been
  negative for 24 h, the vault auto-pauses. Withdrawals remain possible once
  the admin unwinds, but you may exit at a NAV lower than you entered at.

## Liquidation risk (perps)

* Your position is liquidated when `health ≤ 0`.
* Funding payments silently draw your collateral even when mark is stable,
  which means **your liquidation price can drift against you** over time.
* V1 uses full-position liquidation; half-unwinds are not supported.
* The insurance fund covers bad debt, but in extreme cases it can be depleted
  and the market can auto-pause.

## AMM risk (yield-amm)

* **Impermanent-loss-style exposure** if you LP and rates move sharply against
  your deposit ratio.
* **Near-maturity brittleness.** Swaps within 0.1% of maturity are disabled to
  avoid exponent blowup. If you want out, use the split-engine's `redeem_pt`
  or `early_exit` instead.

## Intent-router risk

* An intent session that reverts at step 3 leaves you holding PT + YT that
  may be less valuable than the USDC you deposited (if the AMM moved
  significantly).
* You can unwind manually (sell YT, or early-exit), but the AMM price at
  that moment may be worse than what you originally targeted.

## Keeper incentive risk

* Permissionless cranks (`update_funding_rate`, `update_rewards`,
  `rebalance`) pay no built-in reward in V1.
* If no one cranks, funding accrues without being applied and rewards don't
  flow until the next trader interaction.
* In practice, the protocol and integrators are expected to run keepers. Third
  parties may also run them for MEV reasons.

## Governance risk

* Kimia admin keys are held by the core team in V1.
* Parameter updates (margin ratios, fees, oracle thresholds) are at admin
  discretion. A governance transition is on the V2 roadmap.
* The admin can pause markets and vaults. They **cannot** unilaterally drain
  user funds, every transfer path is gated by the user's authority or by
  liquidation / bad-debt rules.

## Regulatory risk

* Perpetual derivatives are regulated differently across jurisdictions. Using
  Kimia may not be permitted from your jurisdiction.
* Stablecoins and yield products face regulatory scrutiny.
* You are responsible for compliance with the laws applicable to you.

## Use at your own risk

Kimia is provided "as is," without warranty. Our team and contributors are not
liable for losses resulting from use of the protocol. If any of the risks above
make you uncomfortable, do not use Kimia with funds you cannot afford to lose.

See also: [audits & security](/resources/audits),
[terms of service](/resources/terms).