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DeFi Investing Should be About Solid Fundamentals, not Impossible Gains | Analytics

There are different ways to approach the DeFi industry. One option is to blindly throw money at projects hyped by influencers, youtubers and crypto groups. The other option is to do some research and only consider long-term investments in reputable projects with public team members.

A Quick Guide to DeFi Investing

Over the past few months, there has been a growing interest in decentralized finance. Concepts such as yield farming and earning interest allow cryptocurrency holders to make a lot of money. As is always the case when concepts like these arise, there is some cause for concern. Dozens of new DeFi projects are created every week, yet very few of them are effectively worth investing in. Even Vitalik Buterin, the co-founder of Ethereum, is alarmed and cautioned against people throwing money into yield farming.

It is crucial to distinguish between projects in the decentralized finance space. The vast majority of projects have no public team members, smart contract code that may be buggy and unaudited, and tend to disappear very quickly. A growing number of projects fall into this category, as has become apparent in recent weeks. For investors - both newcomers and advanced cryptocurrency users, it is crucial to vet these investment ventures diligently first and foremost.

Legitimate projects are not that difficult to come by. They may not offer astronomical returns on investments within the first week, but that is only normal. Any project with high returns incurs high risks. In a lot of cases, it will result in investors losing part, if not all of their money in the process. Avoiding the obvious pitfalls simply requires conducting some basic research. Once money has been lost, there is no way of getting it back.

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