Decentralized finance (DeFi) leverage products can amplify systemic risk. By enabling high leverage, these products increase market volatility and interconnectivity, as amplified gains or losses cascade across platforms. Liquidation events in over-collateralized systems may trigger chain reactions, especially in illiquid markets. Unlike traditional finance, DeFi lacks centralized oversight and circuit breakers, heightening fragility during stress. Smart contract vulnerabilities and oracle manipulations further exacerbate risks, potentially leading to widespread contagion. However, proponents argue DeFi’s transparency and composability allow rapid risk detection and mitigation. Still, without robust risk management, leverage in DeFi can destabilize the broader ecosystem.