DeFi Vault Risks Shift to Operational Layer: Veda Founder Warns

DeFi vault users are being warned by Veda founder Sunand Raghupathi to stop treating onchain vaults like FDIC-insured checking accounts. He argues that these vaults are structurally closer to hedge funds than savings products, carrying different risks and responsibilities.

The risk model in DeFi has shifted from smart contract exploits to operational layer issues, such as key management, multisig governance setups, and human decisions around strategy deployment and modification. Veda's own vault infrastructure has processed over $16 billion without a major smart contract incident.

Raghupathi emphasizes that onchain vaults execute yield strategies across DeFi protocols, rebalance positions, and expose depositors to various risks. Standardization, such as using ERC-4626, helps with transparency and composability but does not eliminate risk.

Institutional money is increasingly paying attention to vault infrastructure, with Veda raising $18 million in a round led by CoinFund in June 2025. The Kraken integration of DeFi Earn through Veda's infrastructure demonstrates traditional crypto players' comfort with the technology, although it may also reduce visibility for users.