What Are the Security Risks Associated with Smart Contracts?

Smart contracts are vulnerable to coding bugs, logic flaws, and external attacks, such as reentrancy attacks or denial-of-service exploits. Since the code is immutable once deployed, any vulnerability can be permanently exploited, leading to loss of funds.

Audits and formal verification are crucial steps to minimize these risks, but they do not eliminate them entirely. Poorly written code is the biggest risk.