# Risks

There are inherent risks associated with participating in DeFi. Some of these risks include but are not limited to: 

**Smart Contract Risk:** Hubble operates on lines of code known as a smart contract. If a hacker can find a way to exploit a smart contract, they can steal funds. 

Hubble mitigates the risk of an exploit by regularly engaging with third-party security firms that [audit](https://docs.hubbleprotocol.io/security/security-audits#security-audits) our smart contracts. Hubble has also launched a [bug bounty](https://docs.hubbleprotocol.io/security/security-audits#bug-bounty-program) program to reward whitehat hackers for reporting any issues. 

**De-pegging Events:** Stablecoin prices fluctuate naturally with market movements, usually within a very narrow range above or below $1.000. Major events can cause the price of a stablecoin to move beyond this narrow range making USDH worth less than $1. 

Hubble mitigates the risk of de-pegging events in several ways. USDH is backed by at least $1.20 in crypto assets at all times, and USDH is always worth $1 on Hubble. In the event USDH de-pegs, users can repay their loans and retrieve their collateral.

If USDH falls below $1 on the market, users can cheaply repay their loans to retrieve their collateral. Conversely, if USDH rises above $1, users can mint more USDH with their collateral in order to capture a profit. Both of these actions help bring USDH back to $1.

Additionally, Hubble has developed mechanisms such as the [Peg Stability Module (PSM)](https://docs.hubbleprotocol.io/faq/broken-reference) and the [Stability Fee](https://docs.hubbleprotocol.io/faq/broken-reference) to further defend USDH's peg.