One way or another, counterparty risk would find its way into a fully decentralized large scale trading and settlement system.7 This is because these systems, to be scaled up, need in practice some centralized infrastructure (e.g. exchanges) to provide various services (e.g. storage of tokens and cryptographic keys, trade, conversion into other tokens or hard currency, …).
In other words, DeFi, beyond a certain operational scale, is forced to reintroduce the infrastructure that it was supposed to eliminate. And several episodes have shown that this infrastructure is prone to various risks (cyber and fraud risk in  6 7  Communication by Banca d’Italia on Decentralized Technology in Finance and Crypto-assets, Rome, June 2022. See e.g.