- 1.Hacks: Many DeFi applications are unaudited and as a result, are prone to hacks. One must carefully vet the smart contract of a DeFi application before putting it to use in a production setting.
- 2.Need to trust entities providing these applications: Some DeFi applications are governed by different foundations, and entities on the platform would have to trust these entities to not act maliciously, to not close the smart contract, etc. (eg. The Maker Foundation in the case of MakerDAO)