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

# Potential Risks

> Understanding the risks involved when using Creda Finance

DeFi lending carries real risks. Use conservative settings, monitor your health factor, and size positions so you can act under stress.

## Market & Rate Risk

* Price volatility: collateral can fall fast; keep buffers
* Correlation: multiple assets can drop together; diversify thoughtfully
* Interest rates: borrow costs can rise and supply yields can fall

## Liquidation Risk

If HF \< 1.0, liquidators can repay part of your debt and take collateral at a discount. Avoid by keeping HF well above 1.0 (1.5+ recommended), setting alerts, and acting early.

## Smart Contract & Oracle Risk

* Code bugs or integration issues can cause loss
* Bad or delayed prices can affect HF unexpectedly
  Mitigate by limiting exposure, spreading risk, and staying informed about updates.

## Operational & Liquidity Risk

* Network congestion can delay urgent transactions
* Pool liquidity constraints can limit large withdrawals
  Plan for emergencies: keep fee tokens and an action plan ready.

This is not financial advice. Never risk more than you can afford to lose.