The central challenge of DeFi: in order for it to interface with the rest of the world, somewhere there has to be an oracle--some person or institution that determines the pegs/marks/expirations/etc.
DAI, REP, and other DeFi derivs have the same problem.
medium.com/coinmonks/how-
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Think main challenge is that defi has to overcollateralize as an inherent characteristic of the system, which is inefficient relative to fractional reserve systems.
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That's definitely a lot of it!
But even with that, they're reliant on some source of 'truth'--ETH/USD prices for DAO, results of events for Augur, etc.
for when you gaze long into the abyss. The abyss gazes also into you.
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