Ethereum
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ETH · 3w

Basic DeFi Risks To Know About

People began using DeFi without comprehending the risks: here’s what you ought to know about an imperfect technology. If you choose to invest in DeFi, the first step is to make sure the protocols you’re considering are well-audited and secure. You won’t be able to avoid all the risks, and therefore it is worth approaching this consciously as far as possible. That's what we're highlighting in our [channel](https://discord.com/login?redirect_to=%2Fchannels%2F403129541243174914%2F867706362834190338) constantly. Here are a couple of protocol risk examples: * Bugs. An audit is not a guarantee that a protocol cannot be hacked. * Slippage. Slippage occurs when a trader makes an exchange at a price different from the one he initially requested. * 100% withdrawal fee. Some developers, having great powers and a penchant for bad things can prescribe a team in the contract so that the withdrawal fee from the liquidity pool can reach 100%. * Flash loans. This allows you to take out an unsecured loan with the obligation to return it in the same transaction. This opens up space for making fraudulent manipulations with the contract through a large loan in order to withdraw some of the liquidity from the contract. In general, I see a long-term bullish for DeFi. DeFi has a lot of inefficiencies and a lot of developers are already working on it. There may be even more risks with the contract and the protocol, and I have covered only the main points on which it is worth focusing your attention. If you'd like to find more useful info and discuss it with DeFi-oriented users join our Discord [channel](https://discord.com/login?redirect_to=%2Fchannels%2F403129541243174914%2F867706362834190338).
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