> ## Documentation Index > Fetch the complete documentation index at: https://docs.derivatives.ledig.io/llms.txt > Use this file to discover all available pages before exploring further. # Risks and limitations > Understand buyer costs, writer obligations, token risks and the practical limits of using the protocol. Ledig uses fully committed collateral to back option rights. That is an important part of its design, but it does not make participation risk-free. Buyers and writers face different economic risks, alongside shared token, contract and operational risks. ## Buyer risk The premium is paid upfront and is not refunded because market conditions improve, your business no longer needs the exchange, or you leave the option unused. If you never exercise, your unused rights expire and the premium remains spent. You also need the required settlement token to exercise. Holding a bank balance in the currency that a token represents is not the same as holding that token on the correct network. The availability, cost and timing of acquiring it can affect whether you can use your option. An option for one token pair only addresses exposure to that pair. It may not perfectly match a bank payment, a different stablecoin or a separate conversion route. Review the entire route from your original funds to the asset you ultimately need. ## Writer risk A writer sells a right to exchange at a fixed rate. If the buyer exercises after the rate has moved against the writer, the writer must still honour that exchange from the committed collateral. For example, a writer who commits 100,000 USDC at 1,500 cNGN per USDC must accept 150 million cNGN if the buyer exercises in full. If those cNGN can then buy less than 100,000 USDC at the prevailing executable rate, the writer has economic exchange-rate exposure. Premium earnings may not offset that loss. The writer should therefore be willing and able to hold or use the settlement token. Receiving it is the agreed exercise outcome, not a guarantee that the original collateral asset will be returned. Committed collateral cannot be withdrawn simply because a better opportunity appears. Unsold offers can be cancelled within the applicable rules, but purchased obligations cannot be cancelled by the writer. ## Token and issuer risk Stablecoins and other supported tokens depend on their own issuers, reserves, redemption arrangements and technical controls. Their market value can diverge from the reference currency. An issuer may also restrict transfers or freeze addresses. Restrictions affecting a buyer, a writer or a protocol contract can prevent transfers, exercise, claims or withdrawals. Keeping collateral onchain does not override the token's controls. A premium or settlement credit may remain recorded while a token restriction prevents the recipient from collecting it. The name of a token is not sufficient to identify it. Use the supported network and the exact token contract shown for the market. ## Contract and administrative risk Smart contracts can contain defects. Review and audit work reduce uncertainty but cannot establish that every possible failure has been eliminated. Audit conclusions also apply to the code and scope reviewed; they should not be assumed to cover a different deployment or later change automatically. The protocol includes administrative controls for access, assets, market creation and shared components. Compromised or incorrectly used permissions can disrupt normal operation. Fixed series terms and separate vaults do not remove every governance dependency. ## Transaction and expiry risk Exercise must complete onchain before the exact expiry timestamp. Starting a transaction before expiry is not enough if it is included after the deadline. The protocol does not extend expiry because a wallet, interface or network was unavailable. Transactions can fail because balances or approvals are insufficient, liquidity changed, purchase protections were exceeded, a token transfer failed, or the transaction could not execute within network limits. Positions backed by many separate writers can also require more transaction work. Avoid assuming that a displayed balance is a guarantee of successful execution at any moment. A failed transaction can still consume a network fee even though the option purchase or exercise itself is rolled back. ## Wallet and interface risk Anyone able to use your wallet may be able to approve token spending or make transactions. Verify the site, network, token and transaction before signing. Ledig support should never need your seed phrase or private key. An interface or activity feed can lag behind the blockchain. A pending or missing screen update is not, by itself, evidence that a transaction failed. Check its confirmed receipt before submitting another transaction. ## Current product limits Exercise is a buyer action; it is not automatic. Option rights cannot be transferred or resold through a secondary market in this version. Writers manage their collateral and offers per series. A deposit is not an automatically reinvested interest account, and expiry does not automatically roll funds into another market. For practical help, read [exercising and expiry](/exercising-and-expiry), [managing collateral](/managing-collateral) and [troubleshooting](/troubleshooting).