My Top 9 Takeaways from DeFi Summer 2020: How to Succeed as a Degen

Today, I want to share my personal experience and (hopefully) valuable lessons I learned during the DeFi Summer of 2020.

I was right in the thick of it, and I've distilled my top 10 takeaways to help you navigate this wild world of decentralized finance.

Finematics

1. High yield means high risk:

   
   It's easy to get seduced by those juicy APYs that DeFi protocols offer, but remember that high returns often come with higher risks.
   
   APY tokens can feel like Ponzi schemes – they grow fast and die just as quickly.

2. Smart contract exploits:

   DeFi platforms are built on smart contracts, which can be vulnerable to hacks or exploits.

   Make sure to check audit results and consult the community to confirm the contract's safety before investing.
   
   I tend to trust my gut feeling too!

---

Follow me on Twitter for more

Lubin Dirac on DeFi @DeFiDirac

Introducing Onchain Trade on #zksync Era $OT is #DeFi protocol that lets users provide liquidity, swap, borrow, and trade perpetuals with ZERO slippage. It's $GMX on steroid🧵

1. Rug pulls:

   Some DeFi projects might seem promising, but they can turn out to be scams.

   Rug pulls happen when developers suddenly drain liquidity, leaving users with worthless tokens. Stay vigilant and avoid putting all your assets into a single project.

   Personally, I follow the 5% rule.

2. DYOR (Do Your Own Research):

   
   The DeFi space is constantly evolving, so it's crucial to stay informed and make well-researched decisions.
   
   Don't trust influencers blindly, as they might be paid to promote projects.

3. Governance and community:
   
   DeFi projects are governed by their communities. Engage with them to stay updated, contribute ideas, and help shape the future of the platforms you're invested in.
   
   This involvement can reward you with knowledge, reputation, and money in the long run.

4. Transparency and audits:
   
   Look for projects with open-source code, a transparent team, and a history of third-party audits. Trustworthy teams will openly discuss their security measures and respond to questions on Discord or Telegram.
   
   If they don't answer, avoid them.

5. Interoperability:
   
   DeFi protocols should be able to communicate and interact with each other, enabling seamless transfers of value and information. The more complex and layered a protocol is, the higher the risk.
   
   For now, complexity can be a red flag.
   

6. Security is paramount:
   
   Always back up your wallet. I once lost a few thousand dollars when my Chrome updated.
   
   Remember, in DeFi, you're your own bank, and security is your responsibility.

7. Long-term perspective:
   
   The DeFi space is still in its infancy, and there will be many ups and downs. Keep a long-term perspective and invest in projects with solid fundamentals, instead of chasing short-term gains.
   
   But, if I'm being honest, I do chase short-term gains with a portion of my portfolio.