# Risks and Disclaimers

> Spout is a financial protocol. Using it involves real money and real risk.

Canonical: https://spout.finance/docs/risks-disclaimers/

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Spout is a financial protocol. Using it involves real money and real risk. Read this page and the Risks for Borrowers and Risks for Lenders pages before you use Spout.

**Smart contract risk**: Spout runs on Solana programs. They may contain undiscovered flaws, and an exploit could cause loss of funds. Audits reduce this risk but cannot remove it.

**Market risk**: Borrowers can be liquidated if collateral falls, and pay a penalty when they are. Lenders depend on the options strategy; in extreme cases losses can use up Junior and reach Senior.

**Market hours risk**: US stocks do not trade around the clock. Prices can gap at the open, and liquidations happen during market hours.

**Oracle risk**: Spout relies on external prices. A wrong or late price could cause a liquidation that should not happen, or miss one that should. Staleness checks and pauses reduce this risk but cannot remove it.

**Liquidity risk**: Lender withdrawals depend on the reserve, settlements and repayments. In stressed periods, withdrawals may wait in the queue, and Junior requires 45 days notice.

**Counterparty risk**: Tokenized stocks depend on their issuers. Once collateral joins a pool, the shares behind it are held in Spout's brokerage account, and calls trade and clear through that account.

**Operational risk**: Spout's services run options cycles and liquidations. Errors are designed to halt for human review, but delays or mistakes are possible.

**Stablecoin risk**: USDC carries issuer and peg risk, as it does anywhere.

**Regulatory risk**: Rules on tokenized securities and onchain lending are changing and differ by country. They could affect availability, legality or tax treatment.

**Targets are not promises**: Target yields and examples are illustrations. Past or modeled performance, including backtests, does not guarantee future results.

**Not advice**: Nothing in these docs or the app is investment, financial, legal or tax advice. Use Spout only with money you can afford to lose.