Smart Contract Risk

The risk that bugs, logic errors, or exploitable vulnerabilities in on-chain program code could lead to loss of user funds. Smart contract risk is inherent to all DeFi participation because programs are immutable once deployed (unless upgradeable) and handle real value. Mitigations include professional security audits, formal verification, bug bounties, timelocks on upgrades, and starting with small amounts. Even audited programs can contain undiscovered vulnerabilities.