- Decentralized finance has made it possible to obtain independence from traditional financial systems, which is why they have grown exponentially but also for this reason they have become a target of scammers.
- Crimes related to DeFi platforms had a 600% increase over last year.
Decentralized finance (DeFi) is a very important part of the cryptocurrency ecosystem and its growth over the last few months was gigantic. But just as they became a good opportunity for millions of users, they were also a good opportunity for hackers. Taking advantage of the little information that exists, many people have been very upset.
DeFi achieved “independence from traditional financial systems” and they have done so by means of anonymity. Without bank records, you can interact quickly, cheaply and safely. Although this last point could be discussed as long as the user is not fully attentive.
How to Prevent DeFi Fraud
Can you protect yourself from fraud in decentralized finance without being an IT security specialist? Yes. And it is not as difficult as you might imagine. You have to open your eyes wide and follow these steps recommended by José Guadiana, VP of operations of Moneta.
1.- Before entering the money to a platform it is very important to investigate the company / project. Know who is behind this, their credentials, the way forward in the coming years and their reputation, among others. It is also very important to use trusted exchanges that are authorized to operate in the country.
two.- Check that the URL of the platform is correct. One of the most common scams is due to errors in the URL, instead of entering pancakeswap.finance, you enter pancakeswaps.finance. As we can see there is a great similarity in the names but a change in a letter causes that We do not enter an official site, but a copy in which hackers will be lurking and steal our data.
These platforms mimic the real ones almost perfectly but they are not, even scammers pay advertising on Google so that their URL comes first in searches even above
3.– Inquire about the objective of the project to be analyzed. You ask how Does it add value to the ecosystem or is it just another platform’s copy of a different blockchain? Why do you deliver impossible returns when your volume is low? All this is very important before depositing money that is why it is very important that we review all the information around the project and know where it wants to go to know how much future it has.
4.- Find out what the experts say. Although one dedicates 100% to investigating the crypto ecosystem, it is impossible to know everything. That is why it is important to surround yourself with trusted experts. The opinions of specialists are valuable, although the decisions are always your own.
5.- Invest in stable coins. A different option offered by DeFi is stablecoin yields. If you are concerned about the ups and downs of digital assets, it can be a good alternative to earn without much risk.
Thefts in DeFi during 2020
Crypto risk management firm Elliptic analyzed the market and the numbers are staggering. As you read this article, “more than $ 106 billion is currently being invested in various DeFi offerings.” In 2020 the figures were only $ 12.4 billion.
Crime also grew exponentially: the increase over last year was 600%. Elliptic reported that the fraud exceeded $ 10.5 billion in 2021. This amount is almost the same as that which had been invested in 2020.
Although DeFi is not new, it is in its early stage of experimentation and therefore users face very significant risks. You have to be careful because financial independence also means responsibility: nobody will take care of the funds.
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