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How Does the Risk of Smart Contract Failure Compare to Impermanent Loss in Stablecoin Pools?

Smart contract failure is a catastrophic, total loss risk, which is a much greater threat than the typical, small market risk of IL in stablecoin pools.
Greeks.Live21.11.25

How Does the Risk of Smart Contract Failure Compare to Impermanent Loss in Stablecoin Pools?

Impermanent loss is a market risk inherent to all AMM pools, generally resulting in a small percentage loss in stablecoin pools. Smart contract failure, however, is a catastrophic, non-market risk.

A bug, exploit, or hack can lead to the total loss of all deposited funds, a far greater risk than the typical, small IL in a stablecoin pool. LPs must prioritize smart contract security audits over IL mitigation in this context.

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