In a recent publication by the European Securities and Markets Authority (ESMA), attention has been drawn to the potential risks associated with Decentralized Finance (DeFi). The report, released today, sheds light on the various hazards and vulnerabilities that DeFi presents to both investors and the broader financial system.

DeFi has garnered substantial recognition as an innovative phenomenon within the cryptocurrency realm. Its fundamental goal is to offer financial services without the need for traditional intermediaries, relying on blockchain technology and smart contracts for its operations. While it holds the promise of delivering efficient, transparent, and accessible financial services, the ESMA report underscores that DeFi is not exempt from certain risks.

One of the central concerns highlighted by ESMA revolves around the highly speculative nature of numerous DeFi setups. 

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