What is the most direct risk of “unbounded loops” in on-chain code?

Unbounded loops can make functions exceed block gas limits as state grows, permanently preventing execution—classic denial of service. This is common in airdrop distributions, iterating holders, or clearing arrays. Security interviews test this because it’s a real production failure: “worked in tests” but becomes uncallable at scale. Mitigations include batching/pagination and off-chain indexing.