Smart Contract Risk
Plain English
Bugs or vulnerabilities in smart contract code that hackers can exploit to steal funds. Even audited contracts can have hidden flaws. When you interact with a DeFi app, you’re trusting their code is secure. Stick to well-established protocols with multiple audits.
Technical
Vulnerabilities in smart contract code enabling exploits: reentrancy attacks, integer overflow/underflow, access control flaws, oracle manipulation, front-running. Audits by firms (Certik, Trail of Bits) reduce but don’t eliminate risk. DeFi composability creates systemic risk - one vulnerable dependency can compromise entire protocols. Always verify contracts, check audits, start with small amounts.