DeFi projects lost $50 million to protocol flaws in 2025, exposing deep risks. An investment framework begins with auditing smart contracts—90% of hacks, like the 2023 Vyper reentrancy attack, exploit code gaps. Next, evaluate governance: only 3.3% of DeFi startups use decentralized models, risking centralized failures. Assess liquidity—low pools (e.g., $700M TVL on Raydium) signal slippage threats. Finally, check regulatory exposure; unclear laws amplify uncertainty. This framework, a shadowed compass, unveils DeFi’s fragility—high yields (10-15%) mask potential ruin. Investors must weigh innovation’s allure against the abyss of untested code, a spectral dance where millions vanish in a blockchain heartbeat.