# Risks of Perpetual Options ## Liquidation Risk In GammaSwap, there is no liquidation price but there is a time to liquidation. This time to liquidation is an estimation of how long it takes for a position to cross the liquidation threshold LTV (99.5%) based on the current LTV of the position and borrow rate.\ \ If a position is liquidated, the trader is at risk of losing their deposited collateral and any profit they may have achieved. ## Rate Risk The borrow APR is variable based on utilization of the pool. The lower the liquidity in a pool, the more volatile this rate will be. \ Be careful since if the borrow APR rapidly increases, the time to liquidation will be reduced as it is not fixed. You can always add collateral while a position is open to avoid liquidation. Adding collateral is feeless, excluding gas cost.\ \ If you have a highly leveraged position, make sure to monitor your position frequently to avoid liquidation. ## Smart Contract Risk Smart contracts are self-executing contracts with the terms of the agreement directly written into code. While they can automate transactions and enforce agreements without intermediaries, they also carry risks such as software bugs, security vulnerabilities that might be exploited by hackers.\ \ Smart contract risk is reduced by having security researchers review the contracts and with Lindy (time).\ \ GammaSwap contracts have been [audited extensively](/resources/audits.md) and have never been exploited. There is an active [bug bounty program](https://immunefi.com/bounty/gammaswap/) on ImmuneFi to reward hackers who find issues with the contracts. --- # 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://docs.gammaswap.com/guides/tradeperpoptions/risks-of-perpetual-options.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.