Why DeFi is high risk investment

[Festac]

Here are reasons why DEFI is a high risk investment

1. A glitch in the system can lead to loss of funds or blocking of all assets

2. Developers boost that their codes are impenetrable but they can't oversee how users interacts with applications and platforms, meaning human errors are inevitable.

3. Market is very unpredictable and there is no any form of insurance available for investors, they risks of losing fund is very high

4. YIELD FARMING

Yield farming means the creation of tokens to reward users who provide liquidity to a project, meaning it's a must for users to invest their tokens on the project, you won't be able to trade or sell.

Today many projects are going into DeFi because high yields are offered and investors want quick profits too .

With DeFi the risks are insanely bigger compared to ICO.

Your first to third points are pointing to all crypto projects generally, only the last point is talking about DeFi projects, the yield farming bullshit is what many DeFi projects are offering stupid investors who can't do research on their own, all crypto projects carries the same risks but yes DeFi carries the highest risk today

[bubbalex]

DeFi is a high risk investment because they offer too too much profit from nothing. Right now it is just a hot topic to earn huge money from silly investors who wants to earn a lot of money without doing anything. In the hope that the new project will grow in the same way as the previous people invest and really raise the price, time goes on and people begin to understand that after the first wave of excitement there is nothing more, they begin to leave the project and reduce the price, as a result, some of the people earn, and all others remain in the lose in the hope of a new growth. And this is only in case if the project doesn't die completely, when it turns out to be a scammed/hacked.

[TanakabZX]

All crypto projects are HRI it's just that DeFi are now riskier because they are gaining huge momentum this year so far, making it a perfect target for scam devs who have nothing good to offer or add more to crypto world that to steal investors money in return with impossible promises.

[TanakabZX]

People should try as much as possible to do research on any DeFi projects before investing, I mean strict research, not just some whitepaper check and roadmap check, don't go for projects promising you good ROI, if they have staking abilities make sure the returns are reasonable.

[emmaglory5]

Defi is very risky due to staking/farming, As they allow the early investor to farm and stake as much as 4000% to 8000% interest within first 2 to 3 weeks, and they make so much coin, once coin pump, they dump on them, that's why you see all Defi coin dump 30% to 40% in the first week within the release

[Doranile432]

You making it look like only DeFi projects carries the highest risks here, there are scam projects in crypto space that don't include decentralized Finance in their network, warn people about this instead because it's pointing to all crypto projects in general

1. Projects will high yield investment plans
2. Projects with invincible team members
3. Projects that are listed on low exchanges only or uniswap
4. Repetitive use cases

[slaman29]

DeFi is a high risk investment because they offer too too much profit from nothing. Right now it is just a hot topic to earn huge money from silly investors who wants to earn a lot of money without doing anything.

Could have told you that last year when MakerDAO was coming out. The funny thing is in March when everyone lost money almost, except those who got in early of course, was that people just kept coming like flies to candy. You see people get burned over and over, and only a handful make big gains. Wonder why people love inflicting pain on themselves in this space!

[Inkdatar]

This is why I don’t trust to invest into defi project these days. The return of profit is very attractive to the investors and no guarantees that these project will be sustainable in the long run. There is a high risks to this kind of project so a crypto enthusiast or even newbies must be careful and always do a research before investing.

[Lite_bro]

A lot of defi project these days and some people attracted to the return of profit that they can get. Farming/ staking which other interested to invest more the quick profit offer. Also, we notice in social media platforms a lot of defi projects promoting there so this is also a warned to others to be careful when investing.

I must confess I am scare of investing in any DeFi related project going by the the high returns and profits to be earned this is quite similar to a Ponzi scheme, I wonder why some investors do so despite all the warnings I remembered days of investing in ICOs wasn't as risky as DeFis, so many types of this projects are out in the cryptosphere now, how are investors in DeFis are making profits?

If you really want to invest into DeFi projects then just invest in Chainlink. The coin has already solidify its spot for the top DeFi project as of now since for me its the most successful DeFi project. Lots of partners, developments coming out and the upgrade is there. Just invest on that DeFi project and not on others.

As for the DeFi in general, this is the reasons why I don't invest on it at all or maybe I will on ChainLink too if I have some spare money to use. Lots of risks, the rewards are higher obviously but most of them are just pump and dump tokens which will end up worthless in the long run.

The price of Chainlink is to high because it has a good liquidity. But it may drop in every minute. Other assets do not have so big liquidity and they have a small price. Many of them are traded only on decentralized exchanges. To attract users to buy their coins sometimes they use staking system that allows to pay reward for holding tokens not to sell them. Here some information about staking https://medium.com/bonfiorg/introducing-bonfi-web-staking-7368467d18cc

Staking is really interesting, but only under the condition that the coin or token can consistently show growth or not fall in price! Do you know at the moment such coins with a staking system?

[albon]

Any glitch in the defi project system is a disaster, and it may lead to the failure of the project and the loss of investor money, so if there is no team behind any defi project and developers with high experience, the investor's money will be at risk, In my opinion, defi projects are more risky than any previous system, so it is good that you don't make your investment decision on your own, and you can see the recommendations of famous experts and reliable reviews sites.

[beerlover]

One of the biggest reasons why I find defi risky is not because defi itself could ever be risky (it is just a term) but more about how people see it and how they react to it. For example it has made a lot of money for a lot of people and that is why it is seen as something great as of right now, people think it is such an awesome technology that they could potentially make 10x with all the defi they invest into and all the yield farming they make income from.

However what I fear is exactly this; because people think like this, there are fake defi where project team tells everything you want to hear about a good defi project, get your money and leave with it without doing anything at all. I do not know a true real good defi project versus a bad scam one, since I can't see the difference I also do not know what to do with it neither.

[cryptoknightt]

actually you can choose from the type of project because defi is in great demand and booming, of course, it is used by a group of people to take advantage and also defi is rumored to continue to grow in the crypto and blockchain industry because the actual application is indeed good for the current economy.

[samcrypto]

actually you can choose from the type of project because defi is in great demand and booming, of course, it is used by a group of people to take advantage and also defi is rumored to continue to grow in the crypto and blockchain industry because the actual application is indeed good for the current economy.

Not all DeFi project are bad and yes some of them are good in this market so its our choice now where to invest just like the ICO where there was a scam project, and a good one. Crypto investment is a high risk investment, this market volatility can make you lose money so if there’s a chance to invest on those good project, I think its worth the risk.

[Lrshohag]

Investment in DeFi is very risky. I have 1 yland token which is defi. Intially its price was 400$. But now its price is 30$. Think that, If someone invest initially how much lose he have to count.
So really it is very risky. 

[bluebit25]

I have seen the melodrama about DeFi, new DeFi projects are constantly popping up, easy to understand, but new projects are incomplete or scams. I also bought for myself DeFi tokens, what I got back with losses from those investments. If you want to make money investing in a DeFi project, you need to track the project to be very accurate with information, DeFi projects attract many investors, but building clear development plans is to keep the project may be less risky.

[SlimShadyMmp]

major problem with defi these days is you getting rugged or farming insane apy and then farmers dumping their assets and removing liquidity So basically killing the project I think the problem really here is you have to be careful what you choose and its audits or security and then hope they dont rug

[xSkylarx]

Plenty of defi tokens showing up. Their pump and dump is ridiculous that investing too late will cost you a lot of money to lose. DeFi tokens are the new ICO, I can't say all of them are scam or have the same scheme but I don't suggest investing on them. I would rather hold some stable altcoin rather than buying those.

[cryptoknightt]

actually you can choose from the type of project because defi is in great demand and booming, of course, it is used by a group of people to take advantage and also defi is rumored to continue to grow in the crypto and blockchain industry because the actual application is indeed good for the current economy.

Not all DeFi project are bad and yes some of them are good in this market so its our choice now where to invest just like the ICO where there was a scam project, and a good one. Crypto investment is a high risk investment, this market volatility can make you lose money so if there’s a chance to invest on those good project, I think its worth the risk.

that's what I mean just because most new defi projects are bad, doesn't mean they're all bad. You can take chances at any time but must be prepared for the risks. actually can be avoided if you have a lot of experience.

[nomenclatur]

If the Ponzi scheme is applied in a project, all of them will end even the DEFI project will not last long because the Ponzi system really harms a lot of investors who will especially seek their own profits and cannot deny that many scam victims from this Ponzi scheme.

[Fivestar4everMVP]

I totally agree with the op, I've lost alot of money on defi project and now, am trying as much as possible to avoid defi projects, one I invested 4 eth on rug pulled and made away with all our money, the token is listed on uniswap, team removed liquidity and ran away and that was the end of it all.