Source: https://www.placeholder.vc/blog/2021/3/10/systemic-risk-mitigation-in-defi
March 11, 2021 Mario Laul
Introduction
Speculation and risk-taking are essential features of all monetary economies and both are closely tied to the financial sector. History has shown that without appropriate rules, safeguards, and behavioral norms, financial markets become more prone to fraud, pro-cyclical excess, and crises. Occasionally, these crises take systemic proportions, threatening the stability of the economic system as a whole. In a worst case scenario, a financial meltdown can lead to an economic depression, extreme social divisions, or even violent political conflict.