External Call Risk

Definition ∞ External call risk describes the hazard associated with a smart contract interacting with other external smart contracts or off-chain systems. If an external contract contains a vulnerability or behaves maliciously, it can compromise the security or functionality of the calling contract. This risk highlights the importance of thorough vetting of all interconnected components in a decentralized application. Mitigating this risk requires careful design and robust security practices.
Context ∞ In decentralized finance, where protocols frequently interact, external call risk represents a significant vector for potential exploits. A bug or attack in one contract can cascade through dependent protocols, leading to widespread asset loss. Developers prioritize secure coding practices and utilize security audits that specifically examine inter-contract dependencies. The ongoing challenge involves maintaining security across a complex and rapidly evolving ecosystem of interoperable smart contracts.