Research Summary
The report provides a comprehensive guide for beginners to understand and navigate the world of Decentralized Finance (DeFi). It covers the opportunities in DeFi, the risks involved, and the steps to start investing in DeFi. It also discusses the importance of security measures and the role of auditing in DeFi protocols.
Key Takeaways
Opportunities in DeFi
- Expanding Financial Possibilities: DeFi offers a wide range of opportunities such as using tokens as collateral to borrow money, staking tokens to earn APY, yield farming, buying NFTs, and sending money without a centralized exchange. It also allows for the purchase of real estate and stocks using stablecoins.
Getting Started in DeFi
- Setting Up Wallets: To start investing in DeFi, one needs to set up online wallets like Metamask, Rabby, xDEFI, Phantom, Leap, and Rainbow. The report provides a step-by-step guide on how to create a wallet, switch networks, and transfer funds.
Importance of Security
- Securing Investments: The report emphasizes the importance of security in DeFi, recommending the use of hardware wallets or advanced security measures for investments over $1,000. It warns against sharing wallet passwords and seed phrases.
Risks in DeFi
- Understanding Risks: The report outlines various risks in DeFi, including smart contract risk, de-peg risks, liquidity risk, bank-run risk, and admin key risk. It advises investors to be cautious and understand these risks before investing.
Evaluating DeFi Protocols
- Assessing Protocols: The report provides an 8-step guide to evaluate DeFi protocols, including checking social media presence, reviewing whitepapers and roadmaps, verifying audits, researching the team, and consulting trusted sources and friends.
Actionable Insights
- Explore DeFi Opportunities: Investors should explore the various opportunities in DeFi, such as staking, yield farming, and buying NFTs, to diversify their investment portfolio.
- Invest in Security: Given the risks associated with DeFi, investors should prioritize security measures, including the use of hardware wallets and advanced security protocols.
- Conduct Thorough Research: Before investing in any DeFi protocol, investors should conduct thorough research, including checking the protocol’s social media presence, reviewing its whitepaper and roadmap, and verifying its audit status.
