Nine DeFi risks explained: smart-contract bugs, de-pegs, liquidations, bridges, oracles, lost keys, platform failure, scams and regulatory change, each rated and dated.
Each risk gets a rating on the Mitey risk scale, a five-step editorial scale borrowed in spirit from avalanche danger ratings:
Rate a specific protocol yourself with the protocol risk scorecard.
Why cross-chain bridges concentrate risk: pooled custody, validator and multisig compromise, wrapped-asset depegs and message bugs, and how to limit exposure.
How rug pulls, honeypot tokens, fake front-ends, approval drainers and social engineering work, the red flags to watch, and how to report a scam in Canada.
How bugs, upgradeable code, admin keys and stacked protocols can cost you your funds, why audits are not guarantees, and how to reduce smart contract risk.
How DeFi liquidations trigger, what the penalty costs, why cascades and gas spikes make top-ups hard, with a worked hypothetical health factor example.
Self-custody means no password reset. How keys and seed phrases get lost or stolen, what happens to crypto when you die, and how to protect your backups.
Custody and counterparty risk at centralized crypto platforms, what QuadrigaCX showed Canada, what registered platforms must now do, and where those rules stop.
Why stablecoin pegs break, from reserve doubts to algorithmic spirals and redemption limits, what a depeg does to your money, and the Canadian rules that apply.
How thin-liquidity price feeds, flash-loan attacks and stale prices can mislead DeFi contracts, the warning signs to watch, and how to limit your exposure.
How changing Canadian rules can affect your crypto: platforms leaving or restricting users, the coming stablecoin regime, proposed CARF reporting and tax gaps.
An editorial teaching scale from 1 (low) to 5 (extreme), inspired by avalanche danger ratings. It reflects how likely a risk is to hurt an ordinary user and how badly. It is our judgement, not a measurement or an official rating.
For most people, scams and mistakes with keys or approvals cause more losses than exotic protocol failures. Bridges and smart-contract bugs are rarer for any one user but can be severe.
Not through CDIC: crypto is not covered. Some private cover products exist for specific smart-contract risks; they have their own terms and counterparty risk.
Education only. Nothing on this page is financial, investment, tax or legal advice, or a recommendation to buy, sell, stake, lend or borrow any crypto-asset. Crypto-assets can lose some or all of their value and are not covered by CDIC. Canadian rules change: check the dated sources above and talk to a qualified professional about your situation. Full disclaimer.
