# Risks associated with JediSwap

1\. Network risk

JediSwap is built on Starknet, a layer-2 scaling solution for Ethereum that is still in its infancy.

This presents a systemic risk, as JediSwap users could be affected by any technical or operational problems Starknet suffers.

#### 2. Risk of high slippage

JediSwap is a new project on a new chain with relatively low liquidity. This could lead to severe volatility and high slippage.

It is recommended to set a certain slippage before executing trades. This way, if the actual slippage exceeds the allowed slippage, the transaction will just fail.

Despite this, JediSwap is still the most liquid protocol on Starknet, controlling over 50% of the network's total value locked (TVL).

#### 3. Risk of impermanent loss

Impermanent loss refers to the temporary reduction in the value of an asset when providing liquidity to a liquidity pool.

Understanding impermanent loss is crucial before investing with JediSwap or any other automated market maker (AMM) platform. Knowing impermanent loss helps assess the potential risks and rewards associated with providing liquidity and understand how asset price changes can affect overall returns.

#### 4. Fake tokens

JediSwap is a fully permissionless protocol that enables anyone to create and deploy a liquidity pool for any tokens.

As such, it is important to be very careful and verify a token's contract address before trading or providing liquidity.

Finally, before investing or using any protocol, it is important to do your own research, as JediSwap takes no responsibility for any funds lost.

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