Losing your money due to the bad investment decisions is less painful than losing your stablecoins that are "parked" waiting. So, what are the top 10 risks of using stablecoins in DeFi on public blockchains?

1. Smart contract bugs — Vulnerabilities or logic errors in protocol or stablecoin contracts can cause loss of funds (exploits, reentrancy, oracle manipulation). Check security audits.

2. Counterparty/peg risk — Algorithmic or fiat-backed stablecoins can lose peg or fail to redeem 1:1, causing value loss. You can find a 3rd party risk ratings and investigate.

3. Oracle manipulation / price feed failure — Compromised or stale oracles can trigger liquidations, bad trades, or loss of collateral. Try to understand the logic there.

4. Liquidity risk — Low liquidity in pools or markets can produce large slippage, failed exits, or inability to unwind positions.

5. Liquidation cascade / systemic risk — Rapid price moves or correlated liquidations can force forced sells and wipe out positions across protocols.

6. Governance risk — Malicious or poorly designed governance (rug pulls via admin keys, governance attacks) can change protocol parameters or drain funds.

7. Cross-chain bridge risk — Using wrapped or bridged stablecoins exposes you to bridge hacks, consensus failures, or custodial counterparty loss.

8. Regulatory / legal risk — Regulatory actions (freeze orders, depegging due to reserve audits, sanctions) can limit usability or value of a stablecoin.

9. Custodial/reserve risk — For fiat-backed stablecoins, issuer insolvency, insufficient reserves, or opaque audits can render the token worthless or unredeemable.

10. Front-running / MEV & transaction risk — Miner/validator or bot extraction (sandwiching, griefing) can increase costs, worsen execution, or cause failed transactions and losses.