Why DeFi is high risk investment

[Mighty_crypt]

Everything about DeFi projects I'm currently seeing is high yield and farming, honestly it's like a HYIP to me, they offer nothing more than investing the tokens back into the project for ROI, we have to be very careful with new DeFi projects, it's like a Ponzi scheme

[marissa23]

There are a lot of reasons for this. The main one is about hype. This industry is alive only while hype around it is alive. Do you remember ICOs? Only really small percent of them were successfull

ICO and Defi are hype but appear at different times, the 2-year ICO journey has scored many successful projects that are still developing. Besides that, it seems the defi hype will end shorter as Market capitalization has decreased considerably and many scam scheme projects have been discovered.

[gwdf1]

Defi itself is not a high risk investment but scams and ponzi under the cover of Defi are risk.
There is risk of some loopholes or exploit on code in Defi but such issues occurs with every financial projects be it centralized exchange or decentralized one. But if they go through internal and external audit as well encourage white hat hackers to penetrate test it, Defi would be a much more secure option than any centralized finance.

Initially, DeFi is a very good idea. However, with time, many fraudsters decided to use it to make money. They still believe people, which think they invest cash in the best projects and will be rich. They also think: “We are helping to develop the crypto industry”.

[antsam]

High risk was always a big part of crypto investments, scams as well.
Yeild farming is a very sketchy thing, I'd call it a scam, but thats debatable.
Defi projects do differ from each other a lot - some ICOs are scam, some of them are good opportunities for small projects to grow

That's why investors must be careful about joining the DeFi project, especially since there are many current projects that don't want to have people behind them.

We need to monitor those upcoming projects if they're legit enough on every activities that they have. That's very important to determine which particular aspects of DeFi project will come out as scam, not only accusations but also proofs of evidence. It's really hard to point out one of them because this is a serious matter. Taking risks always fails everybody, so don't ignore every disadvantages.

we can see there are already a number of DeFi projects that end in Scam, hopefully not more

[Savemore]

It is just a seasonal investment wherein it will lose popularity and a lot of investors just like what happened to the ICO'S in the year 2017. It is a high risk but high return because you do not know what will happen to the defi projects. It became so popular because there are defi projects where the coin pump so much and reach 1000% gains in just days. But not all of defi are like that and it is reason why it called as a high risk investment, there are many defi projects where it dump after being listed in exchanges so I really tell a lot of people to avoid defi. Uf thet insisted, then it is their fault if they lose huge amount of money from it.

[AjithBtc]

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.

Maybe you've chosen the wrong Defi project for investment. With the DEFI you need to be more clear, because we're in the early days of DEFI into market. In my opinion as we had ICO in the past it is good to invest on specific projects, and if lucky you'll get rewarded same as that happened during the previous bull market.

[New_order]

High YIELD investments are growing big in crypto space now and what makes me feel sad are newbies that know too little about them, how will they not fall victim when they are told they can make 6% of their investment back every month? I'm one of those who knew that 6% per month is way too much to a real project, this is a complete Pyramid scheme

[gaston castano]

not only defi but all factors of cryptocurrency or other parts have risks.
defi be hype some months ago and of course fluctuated on project defi very high, it makes defi a scary thing because there are many who take advantage of the fomo.
If you join in on the right project or enter and leave at the right time then you have nothing to lose.

[lousie9]

the Defi project offers high return on investment for each of its investors and for me this is not what you expect. since the appearance of the Defi project, I have observed that most of them are Hype. not many of them survive or have a fixed sale value in the market. I like Defi for short term investment, while there is an opportunity then I take it and go before getting stuck in Fomo defi.

[VDraci]

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.

Not just DeFi projects, before DeFi become a thing today we have many HYIP projects in crypto space and many are investing money on them, how many of these people can we stop or control? No matter how many times we warn them they will still keep investing, that's why scammers haven't quit

[CryptoTrip]

Everyone knows that defi high-risk projects, I consider these projects only for a short time, yes, there are really unique technologies that stand behind the projects, but as practice has shown, speculators prevail over investors

[totoy4741]

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.

Yeah, I agree actually most of the defi projects are scam, even those that are been successful have turned into scam. High Risk investments like what you said only those who came first will be able to profit more, then would pull out their assets and jump on another defi project which leave the new comers with almost nothing to farm because of low liquidity.

[Ryushin]

The funny thing about DeFi projects is they all look alike, they are all about HYIP and that stupid Farming thing, multiple scam DeFi tokens keeps showing up every week, to me it's obvious, if any project have nothing new to offer than been just DeFi you'd better distance yourself

[onecall123]

the Defi project offers high return on investment for each of its investors and for me this is not what you expect. since the appearance of the Defi project, I have observed that most of them are Hype. not many of them survive or have a fixed sale value in the market. I like Defi for short term investment, while there is an opportunity then I take it and go before getting stuck in Fomo defi.

I just recalled the early days of DeFi, where it has treated the next big thing in terms of potential gains just like the ICO 2017 hype. However, we can't reject that DeFi hype also drives a great deal of the movement on the Ethereum blockchain. Now hype turn into scams and we're in real trouble once again.

[ecnalubma]

Everything in crypto is high risk investment not just defi projects. Defi or not we have to understand the nature of every investment we make, most people fall to scams because of their lack of knowledge and sometimes greed taking advantage of them thinking they got the real deal and blinded by promises of high returns.

[Sebas.tian]

I see the current passion of DeFi & Yield Farming as the heyday of ICOs, the same high risk of taking advantage of the current hype so that many DeFi scam projects have sprung up

During the ICOs days, the returns of investment wasn't the same as the DEFI we have seen these days, most them as we see have always give something huge compared to the ICOS, so, DEFI projects are more risky than the ICOS days. Defi project promised a return of 300% and above returns for some short period of time which to me is a scam like investment package.

[slashz9]

because the hype defi is on the rise and the volume on defi coins every day is more volatile than other coins, that is why when the market starts moving up or down at the start of the koib defi phase it will move faster.

[passionplus]

Many ICO projects came in 2017.  At first this ICO project has given a lot of profit and many scam ICOs have come and killed a lot of investors.  In 2020 a new concept has come which is called defi.  There are many deficiencies like the ICO concept of 2017 which is why investors are now afraid to invest.

[shinratensei_]

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.

YIELD FARMING was actually BS. The creator of this platform has been using yield farming as a replacement for the ability of token that when it can be managed properly like BNB, it can bring a lot of benefits like commission, dividend or more utility usage for token.
The dev has no competence to create the utility usage for the token and that's why they were using yield farming as a replacement for the ability of tokens.
This is completely BS and scam. 10000%+ APY? that's the worst thing that i have ever seen in the crypto.

[emmaglory5]

Indeed, there have been several instances in recent history that have revealed that while DeFi platforms may not be at risk of security breach in the same kinds of ways that centralized platforms are–but they certainly aren't completely safe from harm