Risks & Warnings
Information about risks when using DeFi
Warning
DeFi carries high risks. Make sure you understand the risks before participating.
Market Risk
Price volatility can affect asset value
Cryptocurrency prices can be highly volatile. This can affect the value of assets you are staking or providing as liquidity.
How to mitigate:
- • Only invest what you can afford to lose
- • Diversify your portfolio
- • Monitor the market regularly
Liquidity Risk
Difficulty withdrawing assets
In some cases, you may face difficulties withdrawing your assets due to lack of liquidity in the market or protocol restrictions.
How to mitigate:
- • Understand the withdrawal mechanisms of the protocol
- • Check liquidity before participating
- • Don't invest all your assets in one protocol
Regulatory Risk
Regulatory changes can affect DeFi
Cryptocurrency and DeFi regulations are evolving. Regulatory changes can affect how DeFi protocols operate.
How to mitigate:
- • Stay updated on regulatory news
- • Comply with regulations in your jurisdiction
- • Diversify your portfolio
Technical Risk
Technical issues can lead to asset loss
DeFi protocols can experience technical issues, hacks, or security vulnerabilities. This can lead to loss of assets.
How to mitigate:
- • Use audited protocols
- • Follow security news
- • Start with small amounts