Decentralized finance is a constantly growing market, which has reported higher interest rates and yields than the traditional financial sector.

1. Risks of Decentralized Finance

2. Favorite Target of Hackers
DeFi Development Services applications can manage a lot, a
lot, of money in their smart contracts.
This makes them a target of interest to cybercriminals, who are
on the trail of businesses vulnerable to inadvertent attacks.

3. Inadvertent or intentional encoding error
Smart contracts make it possible to execute vital operations for
these platforms, such as money transfer, token custody or
credit settlement.
An error in coding a smart contract could lock up customer
tokens with no possible solutions.
Also, malicious entities that make life in the ecosystem, could
use their contracts and the inexperience of users, to get hold of
money from their customers without them noticing.

4. Frauds
Due to the explosion in popularity of DeFi Development,
phishing attacks (identity theft) or fraudulent platforms that seek
to replace the original ones have also increased.
Whether it's downloading a malicious app, launching a fictitious
token, or sending virus emails capable of stealing personal
information, users in the ecosystem need to be alert to potential
sources of theft or phishing.

5. Errors of Use
One of the characteristics that most concerns users of
decentralized networks is that, due to the elimination of
intermediaries, the responsibility for the service is transferred to
the users.
If users do not take the necessary measures to secure their
finances or do not have sufficient knowledge to manipulate
these assets, it may happen that they lose access to their
wallets, transfer their money improperly or do not operate one
of these financial services correctly.

6. Insider Trading
And to understand how important the management of
information and knowledge is in the DeFi market, one must also
know that this ecosystem is vulnerable to a practice known as
“insider trading” or “trading from within”.
Insider trading is a risk that all markets that are just being
formed run, since many creators and employees of these
businesses tend to use information that they have access to
due to their privileged position to make profitable investments.

7. Accumulation of Interoperability Vulnerabilities
The DeFi market is considered one of the riskiest in the
cryptocurrency community due to its volatility and accumulation
of financial risks.
Due to the fact that it is an interoperable ecosystem, with high
composability capabilities, the operation of many of its
applications depends on other tools with which it interconnects.
For example, if something goes wrong with the MakerDAO
protocol, lending platforms, decentralized exchanges, and
liquidity pools could also be affected by the issue, since Maker
underlies many of them.

8. Conclusion
Cryptocurrencies have brought about a change in the
functioning of money, as we knew it.
DeFi Development Company now proposes to take this one
step further and bring the different elements of the conventional
banking system into a fully digital and decentralized
environment.
All this eliminating the need for trusted third parties, eliminating
the additional costs of the conventional banking system,
reducing management times and reducing tedious bureaucracy.