THE RISKS DESCRIBED IN THIS SECTION ARE NOT EXHAUSTIVE. By using the Protocol, you affirmatively acknowledge and accept all inherent risks, including but not limited to:

5.1 Smart contract risk. The Watt protocol’s smart contracts could, in theory, be exploited, resulting in the theft or permanent freezing of funds. This risk is inherent to all smart contracts and can never be entirely eliminated.

5.2 Third-party risk. We are dependent on several external services—predominantly the constant-product market-maker (CPMM) liquidity pools on the Raydium DEX. Because Watt’s core functions require Raydium’s CPMM to operate correctly, any vulnerability, outage, or misconfiguration affecting that infrastructure could impair Watt or expose users to loss.

5.3 Volatility insufficiency risk. Returns on Watt assets are driven by market volatility, an inherently unpredictable variable. During extended periods of low or “flat” price action, annual percentage rates (APR) can fluctuate sharply—or decline altogether. 

5.4 Liquidity and price divergence risk. Users should monitor the depth of liquidity in both the underlying token’s pool and the corresponding Watt asset pool. If either pool is thin, trades may suffer significant slippage, leading to potential losses.

5.5 Fee parameter risk. The initial liquidity providers set the fee schedule for each Watt asset. Fees that are too high or too low can erode net returns—both scenarios can suppress yield. Users should therefore always review the current fee configuration before trading or supplying liquidity.

5.6 Network liveness risk. Outages or heavy congestion on the Solana mainnet can halt swaps and arbitrage, allowing Watt asset prices to stray materially from their underlying value. Although these dislocations are usually short-lived, users should always confirm the current status of the Solana network before transacting.

5.7 Token-2022 extension compatibility risk. Watt protocol relies on the Token-2022 transfer fee extension. Although support for this feature is now common across the Solana ecosystem, certain legacy wallets and applications may still handle transfer-fee tokens incorrectly—or not at all. Before interacting with Watt assets through any third-party service, confirm that it fully supports transfer-fee–enabled tokens.

5.8 Total Loss. Generally, there is a risk of complete and irreversible loss of your principal and rewards. The Protocol does not provide insurance, and no governmental agency insures your assets.
You can read more about risks and their mitigation in the associated section of the Documentation.