Risks to DeFi and how to limit them ㅤ This post may not mak | CRYPTO TREYSI

Risks to DeFi and how to limit them
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This post may not make sense to everyone, but try to get into it anyway. It will be helpful.

DeFi has great potential, but it's not really safe for mass adoption at the moment because of repeated hacks and exploits.

One example:

• Synthetix was attacked by Oracle on June 25, 2019, causing about $37 million in damage (the attacker returned the stolen funds after negotiations).

Oracles are services that connect blockchains to the outside world: decentralized applications, other blockchains, trading venues, etc.

Chainlink currently plays a major role in leading DeFi projects such as Aave, Synthetix, and Yearn. If there is a serious problem with this oracle project, the whole system will be affected. But the crux of the problem is not just security, but also the way the protocols are developed.

The right thing to do for now is to develop protocols without oracles, which will make them more reliable and secure. In the long run, projects and companies will not trust protocols that depend on only one oracle, and oracle-free protocols will in turn enable users to use their own data retrieval channels. In doing so, they will continue to be able to interact with each other in the marketplace.

VC Nascent has also written a very interesting series of articles about this. If you want to understand the impact of oracles on DeFi-protocols, be sure to read

Do you buy DeFi project tokens?

- Yes
- No

#education

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