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

# Risk Management

### What is it

The Comptroller is the risk management layer of the SeahorseFi protocol; it determines how much collateral a user is required to maintain, and whether (and by how much) a user can be liquidated. Each time a user interacts with a ibToken, the Comptroller is asked to approve or deny the transaction.

The Comptroller maps user balances to prices (via the Price Oracle) to risk weights (called [Collateral Factors](https://docs.compound.finance/v2/comptroller#collateral-factor)) to make its determinations. Users explicitly list which assets they would like included in their risk scoring, by calling [Enter Markets](https://docs.compound.finance/v2/comptroller#enter-markets) and [Exit Market](https://docs.compound.finance/v2/comptroller#exit-market).

### Oracle Risk

Seahorse is at the moment woulld be fully reliant on the StateRelayer developed by Birthday Research in which the bot relays price oracle from the native DeFiChain for fetching prices of the available asset. This dependence, while generally reliable, created a single point of failure. An erroneous or stale price could, without a secondary mechanism for validation, pose threats such as unwarranted liquidations or inflated borrowing. We are looking to engage with the wider community for a more sustainable long-term solution.

**General** 

In general the use of DeFi applications can lead to loss of funds due to either malicious developers or unforeseen vulnerabilities in a given protocol, users should conduct their own research before depositing funds into a given DeFi application. 

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**Maximum Utilization Risk**

In heavy utilization, funds may temporarily be unable to withdraw until the utilization rate decreases.