Smart contract risk is the crypto version of operational risk — invisible until it destroys capital. What is happening: Code bugs, oracle manipulation, governance attacks and bridge exploits are the tail risks specific to DeFi. No audit eliminates them; it only reduces the probability. That matters because yield comparisons between CeFi and DeFi are incomplete without pricing in the probability of a smart contract failure. In practice: An unaudited protocol offering 50% yields might seem attractive until you realize that $200M in DeFi hacks happen annually from contract vulnerabilities. Watch for: The mistake is treating audited = safe. Audits are necessary but not sufficient; many exploited protocols had multiple audits. Useful lens: Before reacting, ask what mechanism would still matter here if the headline disappeared tomorrow. A lot of confusion disappears once you separate the headline from the mechanism.