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What Is ‘Smart Contract Risk’ and How Is It Addressed?

Risk of financial loss from code bugs or exploits, addressed by security audits, formal verification, and bug bounties.
Greeks.Live06.11.25

What Is ‘Smart Contract Risk’ and How Is It Addressed?

Smart contract risk is the potential for financial loss due to a bug, exploit, or flaw in the contract's underlying code. This can range from logic errors to re-entrancy attacks.

It is primarily addressed through rigorous third-party security audits, formal verification of the code, and bug bounty programs. Some protocols also implement governance mechanisms or 'kill switches' to pause or upgrade contracts in emergencies.

Why Is Formal Verification More Challenging for Mutable Contracts?
How Does Formal Verification Help in Preventing Bugs in Financial Smart Contracts?
What Happens If There Is a Bug in a Smart Contract’s Code?
How Does a Smart Contract Audit Differ from Traditional Code Auditing?

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