Risks & Risk Management

Yield farming carries significant risks: Smart contract risk (bugs, exploits), impermanent loss (for LP positions), oracle manipulation, rug pulls (malicious projects), and composability risk (if one protocol in your stack fails, everything connected can fail). Risk management strategies: diversify across protocols, use audited protocols only, understand what you're depositing, keep emergency reserves, use tools like DeFi Safety for protocol ratings, and never invest more than you can afford to lose.