ZeFi deposits are not FDIC insured.
User Funds are protected against smart contract risk through smart contract insurance which covers the following: The insurance will cover “unintended code usage” where someone, not necessarily the cover purchaser, has suffered a financial loss on the smart contract. While your funds are backed by smart contract insurance, this is not a guarantee as the smart contract insurance technology is still in its infancy.
Other risks include:
- Governance/Protocol risk (includes the risk of Compound admin keys being compromised)
- Liquidity / bank run risk
- Credit risk