Definition ∞ Token holder risk is the potential for financial loss or adverse outcomes faced by individuals or entities holding digital tokens. This risk can stem from market volatility, smart contract vulnerabilities, regulatory changes, or project failures. It represents a significant consideration for participants in the digital asset economy.
Context ∞ Token holder risk is a pervasive concern across the digital asset landscape, influencing investor behavior and regulatory scrutiny. Factors such as a token’s utility, governance rights, and the underlying protocol’s security directly impact this exposure. Mitigating this risk requires thorough due diligence, understanding protocol mechanics, and staying informed about market and regulatory developments.
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