Structural Fragility

Definition ∞ Structural Fragility describes inherent weaknesses within a market or protocol that make it susceptible to significant disruption or collapse under stress. These vulnerabilities can stem from over-leveraged positions, concentrated ownership, opaque financial practices, or fundamental design flaws. Such fragility increases the risk of cascading failures during periods of market volatility or external shocks. Identifying these weaknesses is crucial for assessing overall system risk.
Context ∞ The discussion surrounding Structural Fragility in digital asset markets frequently arises during periods of market downturns or project failures. A key debate involves distinguishing between temporary market corrections and deeper, systemic vulnerabilities. Critical future developments include enhanced regulatory oversight, improved transparency standards, and the implementation of more robust risk management protocols across decentralized finance.