What Is the Concept of ‘Contagion Risk’ in a Diversified DeFi Treasury?

Contagion risk is the possibility that the failure or collapse of one asset or protocol in the treasury's portfolio triggers a cascade of failures in other, seemingly unrelated assets. For example, if a major stablecoin de-pegs, it could cause a liquidity crisis across all protocols that use it as collateral, impacting the value of the entire diversified treasury.