Recently, some DeFi protocols have been pushing for automated leverage execution, which sounds very efficient. But upon closer inspection, there is an easily overlooked issue.

When leveraged trading shifts from individual decision-making to protocol rules, and from manual operations to automatic execution, it may seem that risk management has become more scientific on the surface. But in reality? The risk hasn't disappeared; it has just shifted position.

Imagine this: previously, leverage was dispersed, with each user making independent judgments—some aggressive, some conservative—so the risk points were spread out. Now, it’s standardized—everyone follows the same set of rules, the same trigger conditions, and the same liquidation logic. As a result, individual user volatility is indeed reduced, but if the system encounters a problem, all positions could potentially be liquidated simultaneously. This transforms individual risk into systemic risk.

This trade-off is unavoidable. Automated leverage makes it easier for ordinary people to participate in trading markets, and liquidity improves, but the cost is that risk is concentrated at the protocol level. In extreme market conditions or contract bugs, the entire ecosystem could be affected.

So the key question is: when designing this standardized leverage system, have these protocols truly fully considered systemic risks? Are contingency plans in place? Will the liquidation mechanism fail under extreme pressure? These are all worth examining carefully.