Why do you need to understand the risk of DeFi/Web3?
DeFi and Web3 are Decentralized and it does not have any regulator that can suspend a protocol uncontrollably, everything happens too fast such as dumping a token, exit scams, prices manipulated, exploits, etc.
Risk Level of DeFi / Web3
Based on the image above, it’s clear that even projects with KYC (Know Your Customer) and audit certifications are not entirely risk-free. Several factors contribute to potential risks, such as the possibility of developers abandoning the project or the project selling a large number of tokens, leading to a significant loss in value. It is important to understand that no product or service can be guaranteed to be completely safe. This information is intended to inform you of the inherent risks. While the likelihood of these risks may be low, they still exist.
Understand pre-sale project risk.
Projects in pre-sale phases (selling coins or fundraising) carry high risks, even if they have been audited or undergone KYC procedures. The potential risks include:
Risk of Project Abandonment:
• Project owners might create pre-sale tokens to raise funds and then disappear once they have collected sufficient amounts, leaving the project abandoned. It is crucial to note that having a KYC or a smart contract audit does not guarantee the project’s safety. While KYC can help identify responsible individuals for legal proceedings, it is not a foolproof safeguard. If you fall victim to such a situation, take urgent and serious legal action in your area.
Risk of Project Failure:
• Projects may face unforeseen problems during implementation, leading to potential losses for investors. This is a factor that is difficult to control, and it is essential to understand and assess your risk tolerance before participating in any project.
Risk of Token Price Decline:
• Although pre-sale prices are often set lower than the anticipated launch price, there is a significant risk that the token price may drop below the pre-sale price. It is crucial to acknowledge and accept this risk before joining any project.
Understanding these risks is necessary for making informed decisions. Always evaluate your potential and risk tolerance before investing in any project.
****** This article is learning content, Any content on scrl.io is not investment advice.