Defi Fragility

Definition ∞ DeFi fragility refers to the inherent vulnerabilities and risks present within decentralized finance protocols and applications. These weaknesses can arise from smart contract exploits, oracle manipulation, liquidity crises, or systemic dependencies between protocols. Such fragility can lead to significant financial losses for users and instability across the DeFi ecosystem.
Context ∞ News about DeFi often covers incidents of protocol failures, hacks, or economic exploits that highlight its inherent fragility. Regulatory bodies and industry experts frequently discuss the need for improved security audits, robust risk management frameworks, and clearer regulatory guidelines to address these concerns. Understanding DeFi fragility is essential for assessing the stability and safety of various decentralized financial products.