Vitalik Buterin has warned of the risk factors of smart contracts. Smart contracts are a new technology and a lot of them have yet to be vetted. For example, Sushiswap is this week’s flavor of DeFi farming and is offering 5 ETH to whoever audits the contract first. How much money do you think is locked in a relativity new, un-audited contract? 10m? 50m? Nope – $350M!
Greed is blindly driving this DeFi school bus. Will it eventually crash into a wall? Perhaps. People are so eager to throw their life savings at the next DeFi fad, what could possibly go wrong? Don’t get me wrong, I’m excited we are trying new things and expressing ourselves through cryptocurrency. At the same time, I believe we all need to take into mind the heightened risk that are associated with these unheard of projects.
“I think one big one is just that a lot of people are underestimating smart contract risk.”– Vitalik Buterin
If god tier Vitalik Buterin himself is speaking out about the high risk of smart contracts and DeFi farming, maybe you should listen. I’m not saying pull out 100% and abandon DeFi. Simply understand the risk that is associated with this adolescent space and manage your risk accordingly. Don’t invest more than you can afford to lose.
“It’s a short term thing. And once the enticements disappear, you could easily see the yield rates would drop back down very close to zero percent.”– Vitalik Buterin