Decentralized finance (DeFi) opens access to a variety of financial instruments — from staking and farming to lending and DEX trading. However, with freedom and decentralization come risks: bugs in smart contracts, unstable tokens, interface errors, phishing sites, and even lack of liquidity. Here’s how to minimize these threats:
1. Use only verified protocols
Choose DeFi applications with a good reputation, high TVL, and code audits from recognized companies (e.g., Certik, Trail of Bits). Websites like DefiLlama help track reliable protocols based on the amount of locked funds.
2. Check contracts
Before interacting, check the contract address on official sources. Do not rely on the first links in Google — instead, look for information in the official Discord, Twitter, or the project’s website. Fakes are common.
3. Split amounts
Do not throw all your capital into a protocol at once. It’s better to test the interface with a small amount first, and only then invest larger sums. This will help avoid losses due to UI errors, gas issues, or unexpected changes in conditions.
4. Study the mechanics
Understand how the protocol works: what tokens are used, how income is generated, if there is a lockup, and how profits are withdrawn. Many user errors arise from a lack of understanding of the basic logic of platform operation.
5. Don't chase yields
High APY is almost always an indicator of high risk. Risks are often not obvious: for example, some tokens generate income in illiquid or hyperinflated tokens.
6. Use protective tools
Install extensions like Revoke.cash or Rabby to monitor permissions. Regularly check which contracts have access to your tokens and revoke old or suspicious permissions.
7. A cold wallet is your safety net
It is best to interact with DeFi through a hardware wallet. Even if you use a hot wallet for convenience, keep your main assets in cold storage.
DeFi is a powerful tool, but only in the hands of a conscious user. Approach the selection of protocols with the same care you would use when choosing a bank or investment fund.
