Challenge #2: Diving in DeFi world / How to minimize risks in DeFi?steemCreated with Sketch.

in Project HOPE5 years ago

Hello Steemit community, this is my participation in the Steem Crypto Challenge Month #2 : Diving into DeFi that is carried out by @steemitblog with the support of @steemcurator01 and @steemcurator02. Talking about DeFi lately has been a kind of fad, which undoubtedly has been able to accelerate the growth of cryptocurrencies capital. However, this has caused many large investors to put their eyes and capital into the decentralized finance system and get large profit margins, it has also caused some smaller investors to put their money at risk on projects that have not been auditable or verified, and may have lost their funds. This is not new, scams are everywhere, and since the emergence of the internet this has become increasingly easy.

But the lack of knowledge of the risks implicit in the DEFI system and the possibility of much higher income than you might expect from a centralized bank can mean that no risk is seen in the incorporation of capital into any project. I'm not saying that this system is a bad thing, not at all, in fact it's something I'm taking the time to understand, because I think it's simply a great idea, but I can't leave aside the risks that all investments imply, even investments in cryptocurrencies.


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If we stop to analyze the income that we can obtain by leaving our money in a savings account, the interests are really low, generally offered as "interest settled on daily balance payable monthly in arrears, with credit at the end of the month", and if we look closely at countries where the currency is very weak or the inflationary process is very large, the few interests that we could obtain will be neutralized by the inflation and by the charge for account management that generally does the bank in which we have the account, then here if we enter to compare we realize that one of the possibilities of DeFi is that across the intelligent contracts you can have your earnings daily, in addition you can have access at all time to your funds and withdraw them when you wish it, without clauses of permanence.

Of course, I must emphasize that each of the contracts can give you information from the beginning with respect to the form of investment and the conditions, in addition it is good to emphasize that the recommendable thing, beyond reading the conditions is ideal to consult videos that speak with respect to that project in which you think to invest, it is necessary to know that there is something called VERIFICATION OF THE CONTRACTS, this is what gives certain guarantee that this contract already is in the specific Blockchain and will not be able to be modified nor will be able to have access the creator or creators to the funds and to take them to him without previous warning. I say it from my own experience, it is best to review certain things to minimize the risks. Each Blockchain has a scanner that allows you to visualize and corroborate that the contracts have been verified, in the case of TRON it is Tronscan, in Ethereum it is Etherscan, and so on in each Blockchain.

Other risks that we should consider, and keep in mind when we invest in cryptocurrencies in general, even talking about DeFi, is the variation of prices so abrupt that these can suffer. It can be at the moment of investing in a specific price, and minutes after making the investment decrease the price, it is a possibility, which would make that to be able to recover our investment is a much slower process.

There are some projects that emerge as experiments, others that work by cycles, that is, for a certain time they will maintain and then comes some changes, previously agreed in the intelligent contract that executes the protocol, all these details must be taken into account at the time of making an investment.

Another thing that must be borne in mind is that at the beginning, they generally offer large profit margins, which will gradually decrease as other investors come in, since the amount to be distributed as a result of commission charges on transactions, which is what generates the profit for investors, will have to be distributed among many more people, and of course the percentage will decrease. But generally it will be much higher than the return that the banks offer as annual interest.

I am not an expert in the area of DeFi, in fact my experience is little, but the little I have been able to learn so far, and are points that I consider important I must study before risking a little money in search of benefits. I've lost money risking, but I know that's part of it. However, the intention is not to lose, and the way to minimize the possibility of that happening is by reviewing all the projects very well and knowing what the chances are of certain eventualities occurring.

I am not giving any financial advice, I am just making an important contribution in terms of training, since there are many people wanting to earn money easily and quickly, and the easier and faster it is, you may have behind everything someone wanting to take advantage and take what it has cost you to earn.

Did DeFi come to stay?

That's something I don't know, but I do recognize the potential it has as a producer of profit options, and to get rid of centralized financial institutions that have benefited for so long from others' money, giving a small benefit to capital holders.

Are you feeling positive or negative about the future of DeFi?

I particularly believe that since the emergence of cryptocurrencies there has been an awakening of the mind in financial terms, and people are looking for something new, something that is no longer the same as what has been received for decades, which has finally not served to create balance but rather to maintain an imbalance in terms of economics.

Of course, it is necessary for people to be more and more in permanent training so that they can have control of their money, without subjecting it to great risks.

For now I am done, I hope it works for all these few councils, I know that they work not only for the Decentralized Finance system but for everything we want to invest in.

Are you feeling positive or negative about the future of DeFi?

I say goodbye thanks for the reading and support.

Grateful with @steemiblog, @steemcurator01 and @steemcurator02 for generating and supporting this dynamic in which we all learn.

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Hi @josevas217
In the DeFi segment certainly, the risk is high but the gain is high too. Its always recommended to go through the project first and study all the aspects before investing money.

Some of the DeFi projects have given outstanding returns in the last few months that is the reason more people coming over to DeFi. I see DeFi as a path breaker in the crypto investment and hope that traditional investors will also be part of it since other instruments are not doing well these days because of covid. Thanks for sharing this wonderful post about DeFi.

#twopercent #india

@alokkumar121 thanks for your comment.
I think this is an important point, the possibility that traditional investors come to DeFi, so they can know the Crypto world from another point of view, and surely some wanted to invest in other projects related to cryptography.

In Defi we have lot of risks too along with benefits.

Security and gas fee play big role ,most important is volatile of market it give bad impact on our funds on our withdrawal time some times. So need careful always.

Nice post from you. Have a great day ahead.

#twopercent #india #affable

Thank you very much for the comment @lavanyalakshman
I haven't gone into the DeFi world in the Ethereum chain, but I have been able to do some things in the TRON world. And I find it really very interesting.
Grateful for the visit to my post.

Good decision my friend. Hope you get good returns.

Congratulations you are one of the winners of the Steem Crypto Challenge Month...

Thank you for taking part

The Steemit Team

Thank you @steemcurator01 for support. 😀

Hello @josevas217, Thanks for your article. The prices of crypto fluctuate rapidly. So, without proper analysis investment is risky to me. But in DeFi sector some coin are gaining the trust and stability.

Defi seems to be making great waves in the crypto space and it's really getting lot of attention making investors and crypto project adopt them more.

Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💕💓❤️

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