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

# Risks

*What can go wrong, stated without softening.*

Prophet is a market, and markets lose money as readily as they make it. Beyond ordinary trading risk there are five specific risks attached to how Prophet is built. Read all five before committing capital.

{% hint style="danger" %}
**Trade only what you are willing to lose**

A losing share is worth exactly zero and there is no partial recovery. Size every position on the assumption that it could go to nothing.
{% endhint %}

## Smart contract risk

Prophet's contracts are audited, and audited is not the same as bug free. The same applies to the underlying Gnosis Safe and Conditional Tokens Framework contracts that Prophet builds on. A contract level failure is unlikely and would be severe.

## Liquidity risk

Thin markets carry wider spreads and shallower depth, which means a market order can fill materially worse than the price you saw quoted. Use limit orders for any meaningful size, and check depth before you commit.

## Bridge risk

Cross chain deposits route through third party bridge infrastructure. Bridges have failed historically, and a failure during transit is outside Prophet's control. Start with small deposits to confirm the route before moving size.

## Resolution risk

Resolution is performed by an ensemble of models and it is non deterministic by nature. Ambiguous questions or loose resolution rules can mean longer resolution windows and, in the worst case, cancellation at fifty cents per share regardless of your entry price. The models can also share the same underlying misinformation and converge on a wrong answer, and once the on chain review window has closed a finalised payout is irreversible.

{% hint style="warning" %}
**Read the resolution criteria before every trade**

This is the single highest leverage thing you can do to reduce resolution risk. Most disputes trace back to a question that was ambiguous before anyone traded it.
{% endhint %}

## Regulatory risk

Prediction markets have varying legal status across jurisdictions and that status can change. Prophet is not available in some regions, including to US citizens and residents. It is your responsibility to know the position where you are.

## Summary

| Risk                      | Likelihood | How to reduce it                                        |
| ------------------------- | ---------- | ------------------------------------------------------- |
| Smart contract failure    | Low        | Do not hold more on the platform than you need to trade |
| Bad fill in a thin market | Common     | Use limit orders, check depth, split large orders       |
| Bridge failure or loss    | Low        | Small test deposits, prefer direct USDC on Polygon      |
| Ambiguous resolution      | Occasional | Read criteria, avoid subjective questions               |
| Regulatory change         | Uncertain  | Know your jurisdiction before depositing                |


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