# Dangers

Some of the main risks are:

**Smart contract risk**\
Errors in the smart contract are always a possibility. Risks include but are not limited to resources getting stuck or resources being drained.

**Liquidation risk**\
When a loan's LTV surpasses the max LTV, it is possible to be liquidated. This leads to having to pay the liquidation penalties.

**Oracle risk**\
Manipulation of the oracle(s) we use can lead to inaccurate liquidations and other actions that should not be possible.

**Depeg risk**\
Market conditions could lead fUSD to trade at a price far from the (target) internal price. Were this to happen repaying a loan (or liquidating), might become unfeasible. It might also become unfeasible to buy back collateral in **Flux Reservoirs**. This would mean depositors are not only exposed to fUSD price, but collateral prices as well.

**Liquidity risk**\
If fUSD liquidity is low, the system starts behaving in a suboptimal way. Reservoir buybacks might not be possible anymore. Other parts of the system might behave in unwanted ways as well.


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