Risk Management

DeFi can remove middlemen, but it does not remove risk. It redistributes risk across code, collateral, market structure, governance, and user behavior.

That matters because losses often come from the interaction of several weak points rather than one dramatic failure. A protocol can be well known and still deserve a careful checklist.

Smart contract risk is often the first thing people mention, but market structure can be just as important. Thin liquidity or crowded leverage can create losses even when the code behaves exactly as written.

Governance and oracle risk also deserve attention because they shape who can change the rules and what information the protocol trusts. Good risk evaluation asks what can fail, who can intervene, and how users would know in time.