CandleFocus

Beyond Hacks: Understanding and managing economic risks in DeFi

Author: Content Editor
The article discusses the economic risks in decentralized finance (DeFi) and their impact on both protocols and individual users. It highlights that the reported $60 billion in losses only reflects losses at the protocol level, and the actual total is likely much larger when considering individual user losses. Economic risks in DeFi can arise from various sources such as volatile market conditions, inter-protocol dependencies, and unexpected liquidations. The article explains the distinction between protocol-level risks and user-level risks and emphasizes the importance of managing both. It also mentions that managing economic risk in DeFi requires a proactive approach, including understanding protocol mechanics, monitoring market indicators, and assessing potential risks in multi-protocol strategies.

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