What a bank does here: it carries the risk, holds capital against it and, in the US, is backed by FDIC deposit insurance. What you do instead: you carry all of it. That is the honest cost of being your own bank, and it is why this page exists.
The main risks, in plain English
- Smart-contract risk. Code can have bugs. Audits reduce risk; they do not remove it.
- Custodial risk. When someone else holds your coins, their failure becomes yours — as Celsius, BlockFi and FTX customers learned in 2022.
- Depeg risk. Stablecoins can lose their dollar peg. Terra’s UST collapsed in May 2022; USDC briefly depegged in March 2023 when Silicon Valley Bank failed.
- Oracle risk. Protocols rely on price feeds. A bad price can trigger wrongful liquidations.
- Liquidation risk. Borrowing against volatile collateral can wipe out a position in a fast market.
- Operational risk. Lost seed phrases, phishing links, wrong networks. Most losses are human, not technical.
- Regulatory risk. Rules are still being written; the GENIUS Act’s regulations missed their July 2026 deadline.
Protocol safety scorecard
Our scorecard rates protocols on track record, audits, transparency, decentralization and incident history. It is a starting point for your own research, not an endorsement.
Protocol safety scorecard
| Protocol | Launched | Audits | TVL | Incidents | Chains | Notes |
|---|---|---|---|---|---|---|
| Aave V3 | 2020 (V3 2022) | Many (OpenZeppelin, Trail of Bits, Certora, SigmaPrime, others) | Tens of billions USD | None with lender losses | 10+ | Largest lending market; Safety Module and governance-set risk parameters. |
| Compound V3 | 2018 (V3 2022) | Multiple (OpenZeppelin, ChainSecurity) | Billions USD | 2021 COMP distribution bug (rewards, not lender deposits) | 8+ | Single borrowable asset per market (e.g., USDC) simplifies risk. |
| Morpho | 2022 | Many, plus formal verification | Billions USD | No core-protocol lender losses; vault curator risk varies | Ethereum, Base and others | Isolated markets; yields depend on the vault curator you choose. |
| Uniswap | 2018 | Many | Billions USD | No core-contract exploits; LPs face impermanent loss | 10+ | A DEX, not a lender; useful for swapping, LP returns are not interest. |
| Lido | 2020 | Many | Tens of billions USD | None with staker losses to date | Ethereum (stETH/wstETH bridged elsewhere) | 10% fee on staking rewards; validator set concentration is a debated risk. |
| Kamino | 2022 | Multiple, plus formal verification | Billions USD | None with lender losses reported | Solana | Leading Solana lending market; check each market’s collateral list. |
| Jupiter Lend | 2025 | Multiple (built with Fluid) | Hundreds of millions USD | None reported | Solana | Newer protocol: shorter track record means more unknowns. |
A long track record and many audits reduce risk but never remove it. “No incidents” means none that cost lenders money that we know of.
Education only, not financial advice. Rates change and are not guaranteed. CoinPayBank is not a bank.
SourcesCheck your understanding
Quiz: Risk Center
Education only, not financial advice. Rates change and are not guaranteed. CoinPayBank is not a bank.
SourcesGuides in this track
Education only, not financial advice. Rates change and are not guaranteed. CoinPayBank is not a bank.