# Risks All DeFi protocols, including Normal, come with risks, which are important to understand before depositing significant amounts of crypto. Some of the main risks involved in using Normal are outlined below. #### **Smart Contract Risk** There is a risk that smart contracts in any layer of the protocol stack (Normal's interface, DeFindex's vaults, or Blend's lending pools) contain bugs or exploits that lead to unexpected behavior, including loss of funds. This risk is inherent to all smart contracts and relies upon the discipline of the development community, core contributors, and auditors. All protocols Normal integrates with have been independently audited (see Security Audit), but audits cannot guarantee the absence of vulnerabilities. #### **Blockchain Risk** The Stellar blockchain and its Soroban smart contract platform remain under active development, which creates technological uncertainty and security risks that Normal has no control over. The cost of transacting on Stellar is variable and may change at any time, which may result in higher fees or temporary disruptions to the protocol. #### **Oracle Risk** Normal relies on Reflector for the price feeds that power Blend's lending pools. There is a risk that these oracles report incorrect or stale prices, which could result in incorrect liquidations or losses for lenders. #### **Counterparty Risk** Yield on Normal is generated by borrowers paying interest to lend pools on Blend Capital. Although all loans are over-collateralized and protected by Blend's backstop module, there is a risk that during extreme market conditions liquidations fail to fully cover defaults and the backstop is insufficient to absorb losses. In that scenario, lenders could lose a portion of their supplied capital. #### **Yield Variability** The APY on your supplied USDC is variable, not fixed. Yields rise and fall based on borrower demand, pool utilization, and broader market conditions. Yields can decrease significantly or, in rare cases, approach zero during periods of low borrowing activity. #### **Wallet and Self-Custody Risk** Normal is fully non-custodial, which means you alone are responsible for the security of your wallet. If you lose access to your seed phrase or private key, your funds may be permanently unrecoverable. Normal cannot restore wallet access. Always back up your seed phrase securely and never share it with anyone. #### **Regulatory Risk** The regulatory landscape for DeFi protocols is still evolving. Future laws, regulations, or enforcement actions in the United States or other jurisdictions could affect Normal's ability to provide certain services or restrict access for users in certain regions. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://normalfi.gitbook.io/normal/other/risks.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.