DeFi (decentralized finance) promises freedom from traditional banks, but this freedom comes with a certain degree of risk. Let's break it down step by step.
Advantages of DeFi:
1. Accessibility — no bank or intermediary is needed to participate. A smartphone and a wallet are enough.
2. Transparency — all operations occur on the blockchain, you can check the code and actions of smart contracts.
3. Financial freedom — users can borrow and lend, trade, stake, and participate in the governance of protocols.
4. Innovations — DeFi — a playground for experiments: from algorithmic stablecoins to tokenized assets.
Risks of DeFi:
1. Vulnerabilities in smart contracts — a bug in the code can lead to the loss of all funds.
2. Scams and rug pulls — not all projects are honest: the team can "run away" with the money.
3. Lack of regulation — in case of fraud, there are no guarantees of fund recovery.
4. Volatility — the value of tokens can drop sharply.
Conclusion: DeFi is a powerful tool for those who understand the risks. Much depends on your knowledge and ability to analyze projects. Do not invest more than you are willing to lose, and always DYOR (Do Your Own Research).