LemmaSwap is built on top of various decentralized derivatives exchanges and as such, it is potentially vulnerable to an exploit of their smart contracts as well as a forced settlement of perpetuals.
In order to mitigate these risks, the Lemma DAO will need to decide what derivative DEXs the protocol should integrate with, and assign them risk scores and debt ceilings (to cap the amount of collateral that can be lost on any given DEX). Additionally, the insurance fund will be used to mitigate losses for liquidity providers in case these types of events occur.
While Lemma has been audited by Peckshield, no product can be guaranteed to be always safe from exploits. Please do your own research and use at your own risk.