Definition ∞ Smart contract risk refers to the potential for loss or adverse outcomes arising from the execution of self-executing contracts on a blockchain. This risk can stem from coding errors, logical flaws, or unforeseen interactions between contracts. It is a critical consideration for developers and users engaging with decentralized applications.
Context ∞ Smart contract risk is a focal point in discussions surrounding decentralized finance (DeFi) and other blockchain applications, given the immutable nature of deployed code. Current debates often revolve around best practices for secure coding, the effectiveness of audits, and the development of risk mitigation strategies. Analysts are closely monitoring the impact of exploited smart contract vulnerabilities on user confidence and market stability.
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