Smart Contract Risks
Crypto is built on direct, distributed interactions between users. DeFi protocols are, by definition, transparent in nature. They broadcast their own programmed reactions to any action via the smart contract, so the uncertainty and reactiveness of human decision making is removed. This means that the safety of a protocol is based entirely on their ability to anticipate and account for abuse before it happens.
Mistakes are made by developers, who may not understand financial risks or be able to anticipate edge cases and exploits of the code.