Absolutely. But things are rapidly developing on that front too...
The underlying reason for DeFi's risks is pretty simple and profound - Decentralized Finance brings you financial freedom. And there's no riskier thing in the world than freedom. So much so, the bulk of humanity has grown used to trading their freedom (risk) for security.
Since DeFi is about financial freedom, newbies have to understand, that risk itself is a fundamental factor in DeFi. It's NECESSARY. That is a totally new concept for TradFi people, who view risk as an ultimate threat, but never as something constructive.
DeFi is still maturing (as crypto itself) and the technology that utilizes DeFi's inherent risk is just starting to appear.
Main risks in DeFi are:
- Investing in and using a hollow protocol - a rug pull or ponzi. Prevention: DYOR, but sometimes it can't be researched (by the majority), like the Terra incident.
- Investing or using a protocol with low security - hacks. Prevention: Get coverage on your assets, although there's a big inefficiency and insufficiency in current coverage protocols (a question for another thread).
- Bad financial decisions - the chosen protocol is sound, but the user is not managing their assets properly. Prevention: More education! Of course, the learning curve for the crypto beginner is very, very steep.
So, obviously there's an untapped niche for new and innovative protocols, that:
- Help you DYOR in sound DeFi protocols with their risk know-how;
- Bring innovations in the neglected sector of DeFi coverage and insurance;
- Help you climb the steep learning curve;
I think there already are protocols that do just that... but I'm sure the readers can research them on their own.
DeFi cannot continue forward without addressing said problems. Indeed - if DeFi addresses these problems on its own, it will evade all those regulations that are about to be imposed on the sector. Don't forget that US and EU legislation, as well as the Eastern governments, are looking for ways to get rid of DeFi in an attempt to "keep the fiat financial stability".
So protocols that address these problems may not only be instrumental in DeFi's further evolution, but may very well be the saving grace for DeFi against KYC and centralized control by governments.