The potential for vulnerabilities or inefficiencies inherent in the fundamental architecture and rules of a blockchain protocol or decentralized application. These risks can arise from economic incentives, security assumptions, or unexpected interactions between system components.
Context
Protocol design risk is a constant consideration in the development and evaluation of new blockchain systems. Thorough research, peer review, and extensive testing are essential to identify and mitigate these fundamental risks before widespread deployment, ensuring system robustness.
A systemic design flaw permitting extreme leverage on low-liquidity assets enabled an attacker to inflict a $4.9M loss via calculated market manipulation.
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