Topic: what are risks in adding liquidity on a defi platform? (Read 167 times)
The major risk with providing liquidity for Defi coins is the volatility of the coins that you are using to provide liquidity, by providing liquidity it is a much better use of your coins and tokens than just storing them in your wallet. The profits made through this process may be small and seem insignificant but they add up after a while and in this decentralized market and every coin counts
If you are not tolerant of high risks you should choose something that has been working for a certain amount of time and is already popular like uniswap, aave or pancake swap. You even don’t need to do your own research of these projects as they have already been audited several times, you should just understand how to work on such a platform.
But your profit will not be as significant as it can be in case of something more risky.
But your profit will not be as significant as it can be in case of something more risky.
Consider staking options. I think it will be very interesting for you as a beginner. To be honest i still prefer this option the most.
Staking is about earning income from only one asset.
Staking is about earning income from only one asset.
This one could be dangerous too if we're staking on not trusted platform. There are already many ponzi scheme staking platform leaked on the internet and most of them looks so much trustful but at the end they ended up scam. The safest staking platform i think it's on ethereum right now, seems so profitable and the chance of being scammed is under 5%.
Consider staking options. I think it will be very interesting for you as a beginner. To be honest i still prefer this option the most.
Staking is about earning income from only one asset.
Staking is about earning income from only one asset.
This one could be dangerous too if we're staking on not trusted platform. There are already many ponzi scheme staking platform leaked on the internet and most of them looks so much trustful but at the end they ended up scam. The safest staking platform i think it's on ethereum right now, seems so profitable and the chance of being scammed is under 5%.
I think the most experienced is the decline in the value of our assets. because it all also depends on the condition of our assets in the future.
and most importantly choose a truly trusted DeFi platform. it's not just a new DeFi platform that offers huge advantages.
and most importantly choose a truly trusted DeFi platform. it's not just a new DeFi platform that offers huge advantages.
Decentralised finance otherwise known as Defi is a noble idea that will change the financial sector provided those that own some of defi platform have a vision like satoshi! Some of the risk you are confronted with in defi is low Apr, impermanent loss, loss of value, and the risk of hacker draining investors funds from the project.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
That APY you mentioned is very small, there are other farming sites that offers as high as 100% the risk on farming is rug pull where the whales and developers who provide liquidity can withdraw the liquidity leaving other investors with useless coin, and always check the time lock of the code, check https://rugdoc.io/ and check the reviews of farming sites if it's worth investing.
Consider staking options. I think it will be very interesting for you as a beginner. To be honest i still prefer this option the most.
Staking is about earning income from only one asset.
I think that you are missing the point of this thread. he was asking about the risk when you are staking your coins or adding liquidity and you can get passive income from there. So many rug pull cases happened. Staking is about earning income from only one asset.
The main concern should be in the code that used to create the smartcontract. If it's fully audited and it can be said if it's safe for you to stake your tokens.
Op needs to think about this.
IMO, I believe that ever since we ventured into the crypto space we are already exposed to all the risks associated with it, like the market volatility, exit scam, hacking, etc. that's why we should put first in our mind that the risk is always present before we are going to invest in any projects, particularly with Defi, NFT, etc. the self-initiated research and verification, about the project, will help but still, it was not a guarantee that the project will become successful, the word risk is typically associated with the crypto investment, so for me its like a gamble a high risk but high returns. Adding liquidity to any defi platform is our own responsibility and we should aware of it.
legendary
Activity: 3010
Merit: 1028
Leading Crypto Sports Betting & Casino Platform
i think the most dangerous or harmful risk is when the defi platform got exploited or have bug despite how the developers have put so many effort fixing all the holes. that way any money could get lost and there is no assurance that the money could get taken back, but that kind of case is rare but it could always happen.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
Like others already mentioned, here in crypto you can never be 100% sure if the platform where you want to provide liquidity is really legit or is doing a rugpull and you will lose your funds. It is also possible that the platform somehow gets hacked, like for example if an attacker gehts hold of the private keys of the company or stuff like that. If you choose a big and trusted platform though i think those risks should be extremely small like <1%.
Depending on for what trading pair you want to add liquidity there is also the risk of "impermanent loss", which happens when the prices of the two coins that you provided liquidity move in different directions.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
If the matched token become inbalance in price your money is on at risk, liquidity is too risky specially when you chose the token that has high volatility, it's better to go on pool staking, less profit but your investment is secure.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
Personally I do staking on different projects on Binance Smart Chain and Polygon. To find a good project you can either choose something new, if you want bigger APR, but the risk is relevant, or something that has already been working.
If you want to invest in a new project you should investigate the idea, docs and development team. What is more, you should pay attention to marketing campaigns and social media. You necessarily should investigate if there is a big community and there are many people who trust this project and want to invest.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
As the DeFi platform nowadays becomes popular, it could attract scammers to use the trend and create the fake DeFi project and invite many investors to join with them.
If you really want to invest in the project, I suggest you invest in bitcoin and hold it long-term.
Bitcoin does not offer 10% of APY or something like that but bitcoin can give you the profit in the future.
But if you still insist on investing in the DeFi project, you need to be very careful because not many of them can give you the profit.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
The main risks are different hacks, panic and dishonesty of devs (scam). In the first case you can lose everything, but the development team might offer compensation. In the second case, the token of this project is likely to be devalued. But if you stake another coin it doesn’t not matter for you. And in the third case, you can lose everything. To protect yourself from such unpleasant things you should do your own research before investing and be ready for the worst.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
Actually, I lost more than 100$ in one defi platform called Poly yeld yesterday. It happened because of a hack. Despite several audits and my own research, this project was not safe enough. Nevertheless they promise the compensation, but I am not sure that we will get something. But I initially knew that it was a risk that is why I invested money that I wasn't afraid of losing.
I'm about to try Defi platform now but i have no idea about it. All I really just see is that its going to give me more than 10% of APY. This is good enough for me but I just want to be aware of the risk if anything could happen. Any given situation, is this not going to be good?
Jump to: