# Risk Framework As decentralized finance (DeFi) continues to gain momentum, operating through open and borderless protocols introduces new layers of risk—particularly in terms of security, volatility, and protocol integrity. At Paddle, we take a comprehensive approach to risk management, implementing safeguards at both the infrastructure and protocol levels. In addition to undergoing independent smart contract audits by top firms such as PeckShield, we are developing an internal risk assessment framework to detect malicious behavior, irregular usage patterns, and vulnerabilities under extreme market conditions. To further enhance user protection, Paddle has introduced sophisticated risk parameters across our lending pools, including isolation of asset exposure, health factor monitoring, and dynamic interest rate adjustments. This documentation outlines the key risk factors present in the isolated-margin NFT loan market and details the strategies and mechanisms Paddle employs to mitigate them. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.paddlefi.com/risk-framework.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.