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What Is the Risk of Smart Contract Failure in a Decentralized Options Protocol?

The primary risk is a bug or vulnerability in the smart contract code that could lead to the loss or theft of user funds locked as collateral. These failures can result from coding errors, unexpected interactions with other protocols, or a lack of rigorous auditing.

This is often termed 'smart contract risk.'

What Happens If There Is a Bug in the Smart Contract Code Governing an Options Trade?
What Happens If There Is a Bug in a Smart Contract’s Code?
What Is the Concept of “Immutability” and Why Is It a Risk Factor in Smart Contract Errors?
What Is a Key Smart Contract Risk When Implementing a New MEV-resistant Feature?