Hacks and attacks on DeFi platforms might lead to the loss of money.
2
Risks associated with smart contracts
Malicious parties may be able to take advantage of defects or vulnerabilities in smart contracts.
3
Market Risks
DeFi markets can be very volatile, which can cause investors to suffer substantial losses.
4
Lack of Accountability
DeFi is decentralized, thus there isn’t a single entity in charge of holding people accountable. Due to this, it could be challenging to settle disputes or get back lost money.
5
Complexity
DeFi may be complicated and challenging to comprehend, which may prevent certain users from using it.
6
Risks of Centralization
Although DeFi is intended to be decentralized, there is a chance of centralization if a few numbers of powerful players come to dominate the market.
7
Interoperability Risks
Although DeFi’s interoperability has advantages, it also has risks if various protocols and platforms don’t function properly.
8
User Error
Since DeFi requires users to handle their own money, mistakes made by users could result in the loss of money.
9
Risks related to liquidity
DeFi protocols may encounter liquidity problems, which may result in volatility and price changes.
10
Governmental Risks
Since DeFi is still mainly unregulated, there is a chance of regulatory repression or ambiguity.