How long a DeFi protocol can survive mainly depends on whether its risk control system is solid enough. The multi-layered risk management architecture of a leading Liquid Staking protocol is worth dissecting.

First is the smart contract layer. Key processes such as collateral valuation and liquidation triggers are fully automated on-chain, minimizing human intervention—this directly mitigates a lot of operational risks. For example, their DEX has set a 3% price deviation warning threshold. If an asset experiences abnormal fluctuations, the system immediately pauses exchanges to prevent liquidity pools from being drained.

But technology alone isn't enough; governance must keep pace. Token holders have voting rights, allowing them to directly modify core parameters like fee rates and collateral lists, enabling the system to quickly adapt to market changes. During the previous stablecoin de-pegging incident, an emergency proposal was swiftly initiated to trigger liquidation mechanisms, effectively halting the risk from spreading—this demonstrates the practical role of community-driven governance.

The structural design also considers robustness. The liquid staking tokens adopt a 1:1 redemption mechanism, ensuring underlying assets can always be redeemed; multiple oracles provide price data, reducing the risk of single points of failure. Although some innovative collateral types still involve off-chain valuation steps, overall, this framework is built around decentralization and automation, providing a significant level of security for user assets.