What is Protocol Risk?
Protocol Risk The risk of loss or disruption due to vulnerabilities, governance failures, or technical flaws in the codebase or consensus mechanisms of a blockchain protocol held in a portfolio.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Protocol Risk” Used in Practice?
Protocol risk assessment is critical when allocating assets to new DeFi projects or blockchain upgrades within institutional portfolios.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Protocol Risk?
The risk of loss or disruption due to vulnerabilities, governance failures, or technical flaws in the codebase or consensus mechanisms of a blockchain protocol held in a portfolio.
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