Definition ∞ Shared vault risk refers to the potential security vulnerabilities or economic exposures that arise when multiple users or protocols deposit assets into a single, common smart contract vault. If this shared vault is compromised due to a bug, exploit, or malicious action, all assets held within it become vulnerable. This aggregated risk means that an issue affecting one user or integrated protocol can impact all participants. It represents a concentration of risk within decentralized finance ecosystems.
Context ∞ News often highlights shared vault risks following major DeFi hacks where large amounts of pooled assets are stolen from a single contract. These incidents underscore the importance of robust security audits and careful risk management when interacting with shared liquidity or collateral pools. The industry continuously seeks ways to mitigate this risk through better contract design and diversified asset management strategies.
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