# nToken Risks

### Main Risks

Users who mint nTokens have four main risks:

* **Smart contract risk:** A hack of Notional's smart contracts or the smart contracts of a protocol where Notional has funds could lead to a loss of user funds.
* **Bad debt risk:** A borrower insolvency on Notional due to a liquidation failure could lead to a loss of funds.
* **Interest rate risk:** nTokens hold fCash positions. As fCash interest rates change, [the value of these fCash positions can change](https://docs.notional.finance/notional-v3/trading-fcash/interest-rate-risk).
* **Redemption risk:** nTokens can always be redeemed for a proportional share of their prime cash and fCash assets. But during times of high utilization, users can temporarily be unable to redeem nTokens 100% to prime cash.

### Minting cost

There is no fee to mint nTokens. 

### Redemption cost

nTokens can always be redeemed for a proportional share of their Prime Cash and fCash assets at no cost. 

But if users want to redeem 100% to Prime Cash (because they want to withdraw), they may pay a fee. In order to redeem 100% to Prime Cash, Notional will need to sell the user's share of the fCash assets on Notional's liquidity pools to convert them to Prime Cash. 

These trades are handled for the user by the UI and incur the [normal transaction cost](https://docs.notional.finance/notional-v3/trading-fcash/transaction-fees) for trading on a liquidity pool. The size of the fee depends on the utilization of Notional's liquidity pools. The larger the nTokens's fCash position, the larger the fee.