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There is no doubt that DeFi technology has disrupted the traditional financial infrastructure. The technology can provide more efficiency, transparency, and accessibility. DeFi system also allows developers to create new and different services by combining several applications and protocols.
On the other hand, DeFi is still considered new technology, and while it poses to bring great potential, it is good to always keep in mind when getting into DeFi the certain risks involved. The concept of "decentralized" could be deceptive in some cases. Moreover, smart contracts can also have security issues that can cause unintended usage.
We will close the DeFi discussion on this last article of this series by highlighting four main points that should be considered future references for all our readers to consider when investing in DeFi.
Things to Consider when Getting into DeFi
- Where will you store your assets: When deciding to start your investment, make sure to keep the majority of your assets in a safe wallet.
- How your assets will be used: Be sure to understand how your investment will be used. For example, where will the platform lend your funds to, and what is the risk of this investment. Transparency of the DeFi platform will be crucial in making sure your assets are safe, and you will be able to earn profits.
- Technical risks: Understand that while you will not be paying an additional fee for a middleman, the whole DeFi system will be highly dependent on a piece of code. Make sure that the platform you are putting your investment in has a secure code tested.
- Scams: Making sure to conduct your research carefully on the DeFi applications before investing will help prevent getting scammed. Pay particular attention to reviews online and on crypto forums, as this is often the first sign of potential problems. Remember that money lost in the blockchain will be almost impossible to retrieve
Last but not least, we hope all our readers have gained some information and a deeper understanding of the DeFi technology through the MCS DeFi Series. DeFi may lead to a paradigm shift in the financial industry and potentially contribute toward a more robust, open, and transparent financial infrastructure, but always remember to do your research when making your investment decisions.
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