The Five Big Risk Vectors of DeFi

The Five Big Risk Vectors of DeFi
As the decentralized finance (DeFi) market grows, the subject of risk is taking center stage. DeFi holds the promise of automated, transparent and decentralized financial platforms that challenge some of the key foundations of financial markets, but the different risk dimensions in DeFi products remain, for the most part, understudied.What makes risk management in DeFi so challenging is that it doesn’t quite conform with the traditional risk management theory in financial instruments. For decades, capital markets have evolved around risk management models focused on market factors such as volatility. That is mostly because other factors can be mitigated by the risk…