(*5*) 5 Big DeFi Risk Drivers


A unique aspect of DeFi, decentralized governance proposals control the behavior of a DeFi protocol and very often cause changes in its liquidity composition to affect investors. For example, governance proposals that change weights in AMM pools or collateral indices in lending protocols typically help liquidity flow into or out of the protocol. A more alarming aspect of DeFi governance from a risk perspective is the increasing centralization of the governance structure of many DeFi protocols.