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

# Risk Management Strategies

1. Under-collateralized Loan Management:

* Strict repayment schedules to mitigate [default](/mortgagefi-documentation/getting-started/components/defaults.md) risk
* Clear conditions for loan default (failing to keep up repayments)
* Collateral and previous payments cover potential losses keeping the protocol solvent

2. No Traditional Liquidation Risk:

* Unlike typical DeFi loans, MortgageFi loans do not carry sudden liquidation risk
* Loans enter [default](/mortgagefi-documentation/getting-started/components/defaults.md) only if repayment terms are not met

3. Oracle-Free Price Discovery:

* Relies on market-driven pricing through arbitrage
* Eliminates risks associated with oracle failures or manipulations

4. Gradual Fund Integration:

* 3-day streaming mechanism for new deposits and token sales
* Prevents large-scale manipulation and flash loan attacks

5. User-Triggered Default Resolution:

* Community-driven approach to handling defaulted loans
* Incentivizes users to maintain system health
* Efficiently returns funds to the Earn pool

6. Diversification of Assets:

* Support for multiple ERC20 tokens spreads risk across various assets

7. Fixed USD Repayments:

* Protects the system from volatility in borrowed asset prices


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