> For the complete documentation index, see [llms.txt](https://docs.3jane.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.3jane.xyz/levered-callable-capital-lcc/risks.md).

# Risks

LCC is a leveraged standby with binding obligations; protocol-wide risk factors are covered in [Risks](/risks.md).

### Funding obligations

* **Slashing risk.** Missing a call obligation slashes your margin into a Dutch auction, where bidders fund the missed amount in exchange for margin at a discount. The auction awards only what it takes to attract fills and the surplus is returned to you; [Defaults](/levered-callable-capital-lcc/mechanism/defaults.md) covers the pricing and the partial and unfilled cases.
* **The standby is a binding obligation.** A $75,000 stake at a 7.5% margin ratio is an obligation to deliver up to $1,000,000 of USDC within the facility's funding window (9 days at launch). A standby that cannot be funded in that window ends in slashing.
* **Funding with USDC withdrawn from USD3 forfeits future standby fees.** The standby fee pays for capital brought in from outside the protocol. Funding a capital call with USDC withdrawn from USD3 positions results in forfeiture of future standby fees on the position; fees continue accruing only while calls are funded with external capital.

### Margin asset

* **Value decline.** A non-USDC margin asset can fall in value. Standby sizing, auction awards, and the surplus returned after a slash all track the oracle's valuation.

### Liquidity

* **Unstaking is gated and irrevocable.** Minimum staking period, unstake delay, and per-epoch capacity all apply; heavy demand queues into later epochs. You remain callable and slashable until your position exits.
* **Funded capital has a cooldown.** USD3 received from funding is redeemable only after the 35-day cooldown; the full amount unlocks at once when it ends.
* **Positions are non-transferable.** There is no secondary market for an LCC position; the only paths out are unstaking or facility wind-down.

### Counterparty and governance

* **3Jane is fully trusted.** It controls call timing and size, tunes risk caps, rotates the margin oracle, and can pause (with no time bound) or shut down a facility. Staking is a decision to trust 3Jane's operation of that facility.
* **Oracle trust.** The margin oracle prices the bond; standby sizing, auction awards, and the surplus-return valuation all depend on it.
* **Upgrade risk.** All facilities share one implementation behind a beacon owned by 3Jane's 7-day timelock; logic changes affect every facility after the public delay.
* **Eligibility is discretionary.** 3Jane may revoke an address's staking eligibility at any time, including after it has staked, if it detects circumvention of counterparty concentration caps or other signals of elevated funding-failure risk. Revocation can extend to an existing position: 3Jane can remove part or all of an address's active standby, returning the paired margin to the staker.

### Asset exposure

* **Funded capital is USD3 exposure.** Every funded call converts USDC into USD3; from that point the risk is USD3's: the credit performance of the [backing portfolio](/backing/backing.md) and the [USD3 / sUSD3](/usd3-susd3/suppliers.md) tranche structure.
* **Smart-contract risk.** LCC is new code, and audits are listed in [Resources → Audits](/resources/audits.md).