Abstract:The theory of "erosion effect" of risk outbreak is put forward, and it found that the process of risk outbreak is from low to high along the qualification chain, and this process is confirmed by data regression analysis.For emerging industries such as Fintech, vigilance and active prevention of erosion effect is of great significance. Emerging industries that are highly dependent on customer trust, such as fintech, are most likely to have a "erosion effect".Therefore, the erosion effect emerged inevitably in the once rapidly expanding network loan field. The existence of "erosion effect" also negates the current widespread view that the risk outbreak of peer to peer loans is attributed to their "credit enhancement service", and the real cause of risk breakout is the uneven qualification of the enterprises.From the perspective of the government's management of the industry, it is important to keep risk prevention in mind when promoting the development of the industry.In essence, this is the design of the institution-institution interface, so the institution design theory should be used to guide the formulation of risk prevention policies, so as to achieve better results.