🔰Here are 5 common mistakes to avoid in DeFi (decentralized finance) ✅️❌️

1. Neglecting to do your research (DYOR)

Not doing your own research before investing is a common mistake. It is essential to understand the protocols, projects, and associated risks. Don’t blindly follow recommendations or trends.

2. Ignoring security risks

DeFi is prone to hacks, rug pulls, and broken smart contracts. Don’t leave all your funds on a single protocol, and use secure wallets (like cold wallets for large amounts).

3. Investing more than you can afford to lose

The volatility of cryptocurrencies and DeFi assets can be extreme. Don’t put funds at risk for essential expenses or financial security.

4. Being tempted by unrealistic returns

Projects promising very high returns (excessive APY) are often suspicious. They can hide Ponzi schemes or other unsustainable mechanisms.

5. Forgetting about fees and the impacts of fluctuations

Network fees (especially on Ethereum) can eat into your profits if you make too many transactions. In addition, the value of tokens can fluctuate quickly, impacting your returns.

Caution, diversification and a deep understanding of DeFi mechanisms are key to succeeding in this universe.