An Isolation Contract is a type of smart contract designed to limit the exposure of funds to specific risks associated with decentralized finance (DeFi) activities. It provides a safety mechanism by isolating assets within a particular framework, ensuring that if something goes wrong, only the funds in that contract are affected.For instance, if a user interacts with a lending platform or engages in trading, an Isolation Contract can help shield their other assets from potential losses due to hacks, exploits, or market volatility. By compartmentalizing assets, users can better manage their risk.This feature is particularly important in environments where smart contracts are frequently audited and can still have vulnerabilities. By using Isolation Contracts, users gain more control over their investments, allowing them to take calculated risks while protecting their overall portfolio.