Ethereum supports programs that execute under network rules. Smart contracts can hold and transfer assets according to code. Code execution does not guarantee that the program is correct, economically sound or free of privileged controls.
Understand gas costs, upgrade powers and dependencies such as price oracles. A protocol can suffer a loss without the underlying network failing. An audit can reduce uncertainty but is not a guarantee.
Worked example
An application can use an external price feed to value collateral. If the feed or its integration fails, liquidation behavior can be wrong even when the chain keeps producing blocks.
Check your understanding
Does an audited smart contract remove all risk?
Show explanation
No. Implementation, upgrades, dependencies and economic design can still fail.
Progress is stored on this device.