> For the complete documentation index, see [llms.txt](https://pool-party-xyz.gitbook.io/pool-party-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://pool-party-xyz.gitbook.io/pool-party-docs/pool-party-v2-docs/for-users/understand-risk.md).

# Understand risk

Joining a pool involves risk. This page covers the main types so you can decide with eyes open. (The full legal disclaimer is on the Disclaimer page.)

#### **Types of risk**

* **Market risk:** a pool's holdings rise and fall with the market. Your shares move with them, up or down, and you can lose part or all of what you deposited.
* **Strategy risk:** a manager's decisions within the mandate may work out or not. Past performance does not indicate future results.
* **Smart-contract risk:** Pool Party is on-chain software. Bugs or failures in contracts are a risk, as in any DeFi protocol.
* **Asset risk:** each kind of asset a pool holds carries its own risks.

#### **What self-custody protects, and what it does not**

Self-custody ensures no one can take or block your position arbitrarily. It does not remove any of the risks above.

{% hint style="info" %}
Self-custody is about control, not a guaranteed outcome.
{% endhint %}


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