DeFi risks

A mistake in a contract's code can let an attacker drain its funds. Audits reduce this risk but do not remove it.

Bridges that move tokens between blockchains hold large amounts of funds and have been the target of some of the largest hacks in crypto.

Anyone can create a token. Some projects are designed to collect money and disappear. Unknown tokens with unrealistic promised returns are a major warning sign.

When you use a DeFi application, you often approve it to spend a token from your wallet. A malicious or hacked contract can use an unlimited approval later. Approve only what you need and review old approvals regularly.

Borrowed positions can be liquidated automatically if collateral prices fall, sometimes within minutes during sharp market moves.

Wrong price data or a stablecoin losing its peg can trigger losses across many protocols at once.

There is usually nobody to call. A transaction you signed by mistake cannot be reversed.