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The DeFi sector provides unparalleled opportunities for capital management.
However, exercising this freedom requires conducting thorough research and evaluating the risks associated with depositing funds into a particular protocol.
And the fact that this market is rather opaque in its structure and lacks in the way of sophisticated risk management tools means that the task of assessing said risks often falls directly on the shoulders of users.
This poses no small amount of complications as under normal circumstances users should not have to perform their own risk management.
But there is an undeniable gap in security solutions in the DeFi market that leaves them doing just that.
With this in mind, I have put together a list of economic risks in DeFi lending protocols with their comprehensive analysis and ways to assess whether a particular project is taking steps to protect itself against them.
Risk classification and overview
First things first let’s start with properly defining what market and economic risks are.
Market risks mainly involve dealing with external factors, such as market crashes, liquidity crises and systemic…
