> For the complete documentation index, see [llms.txt](https://docs.atomica.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.atomica.org/risks/risks.md).

# 💰Atomica Liquidation Markets

In Atomica Liquidation Markets, all DAO decisions are risk-based and risk-driven. We are trying to figure out a better way to deal with risks from their clear and comprehensive identification to further retention/ mitigation/ transfer of risks.\
We can describe the following categories and single risks among those known and identified for Atomica Liquidation Markets.

#### Risks associated with pool contracts

* *Smart contracts bugs/ hacks*. Technical risk. Bugs that can lead to to security breaches and result in the theft of pool assets.
* *Admin Key* (until there are automated DAO decisions). Human/ centralization risks. 

#### Risks associated with Keeper Adapter contracts/ bidding strategies

* *Network congestion*. A Keeper Pool does not participate in auctions due to a poor gas bidding strategy, or a Keeper Pool pays for gas to participate in auctions. However, transactions do not go through (“out of gas”) with the paid gas being lost.
* *Assets bought at an auction can only be sold at a loss*. An asset price drops faster than anticipated.
* *Bidding above a market price*.
* *Smart contracts bugs/ hacks*. Technical risk. Bugs that can lead to security breaches and result in the theft of assets.
* *Private keys storage*. 
* *Gas expenses coverage*.

#### Risks associated with infrastructure (Risk Oracle, other possible Oracles, etc.)

* *Oracle (Price Feed) performance*. An inaccurate collateral to a DAI price.
* *Oracle (Price Feed) failure.*
* *Front-running on a higher gas price*.
* *Gas price performance*. An inaccurate gas price coming from a data source (i.e., a Gas Station). API failures/ connection failures to a data source (i.e., a Gas Station).
* *Inability to monitor the chain Remote Procedure Calls failures (node access) when you make bids/ monitor*. An example of such a failure is the "connection refused" error during congestion.
* *Mempool front-runners*. Inability to know on-chain bids.

#### Risks associated with governance

* *Governance limits on a maximum withdrawal amount during a hard auction period*. When there is a vote, for example, to set a limit how much you can take out at a certain time. If this vote goes against pool participants, the drained pool will not be competitive.

**Risks associated with Oracles used by MCD and MCD Keepers**

* *The Price Oracles system failed to report an accurate picture of the market. Due to a rapid movement of a collateral price and high gas prices, reporting by "Medianizer" and/ or Oracle Security Module (OSM) can be impaired*. This exposes MCD system to the following. During a volatility period, a probability of a loss for MKR holders - who rely on inaccurate Maker price feeds - grows exponentially in reverse to the downward movement of a collateral price. A probability of a loss for Vault holders grows exponentially, as well, but follows even a steeper curve due to the absence of a “surplus” buffer.
* *Maker Oracles have little incentives to pay super-high gas prices during periods of extreme network congestion*. 
* *Most Maker Oracles have little disincentives from missing the reporting of prices for a few hours*.
* *Maker OSM  updates the price at a hourly basis*. During periods of volatility, Keepers are exposed to a much higher risk of losing (bid and buy collateral at a higher price, sell at a loss) or running out of liquidity if they relay on price feeds.