On Solana, smart contracts are stored in executable accounts containing the program binary. Each such account has an upgrade authority. This authority can replace said smart contract at will. As such, it is one of the most important factors to consider when deciding whether to put your money into a Solana program.
The upgrade authority has arbitrary control over the deposited funds. They could, for example, replace a DEX with a program that does nothing but provide a function to withdraw all deposited liquidity to the upgrader's wallet.
The upgrade authority of a contract can be a DAO, a multisig, or just an ordinary keypair. In the following, we will discuss the pros and cons of these different options.