4 Avoidable Mistakes For A Defi User

Decentralized Finance (DeFi) is a rapidly emerging blockchain-based movement that gives the traditional financial system the core benefits of transparency, security, immutability, and efficiency. The numerous profitable, high-interest earning opportunities accessible throughout DeFi loan and trading platforms are primarily responsible for this expansion.

At Umee, we consistently encourage and educate our community to avoid making defi mistakes. This blog serves as a short refresher for existing users and a helpful reference for new users looking to avoid these common mistakes that may end up losing funds.

Let’s deep dive into these mistakes.

1. Sending token to the wrong address

By definition, blockchain transactions are irreversible. While a bank may be able to refund cash to your account in the event of an error or fraud, all crypto transactions are irreversible. That implies users must send tokens to the right addresses and provide their addresses to others so that they can receive transactions.

While staking your funds, Make sure your wallet is compatible with the network you wish to interact with and that the right network is selected before performing any transaction.

2. Not Keeping Seed Phrase Safe

One of the most crucial aspects of your crypto wallet is the seed phrase. Even if your wallet has been lost or deleted, it allows you to access your crypto wallet and saved assets. To safeguard access to your crypto assets, you must keep your seed phrase private.

You should avoid:-

  • Take a picture of your seed phrase.
  • Saving seed phrase into Password Manager App or Cloud Storage.
  • Emailing seed phrases to yourself.

A seed phrase, unlike a password, cannot be altered, therefore it must always be kept safe and accessible. Furthermore, if you have a big quantity of funds in your crypto wallet, missing or having your seed phrase stolen might result in a huge loss of funds.

For more information please read this detailed article about keeping seedpharase safe.

3. Not Paying Enough Transaction Fees

Users of the blockchain must pay fees to network participants, who spend time and energy processing and recording transactions. A user adds the gas payment (Transaction fees called in Ethereum network) before completing a transaction.

If the payment amount is too little, the transaction may take a long time to complete or be rejected entirely.

You can check the bridge fees from your wallet transaction screen.

4. Not Doing Proper Research

While crypto YouTube is filled with a lot of false hype or with crypto trading advice, major news sites are also filled with negative and threatening news. Keep in mind that a lot of videos or the news articles are just exaggerated content intended for the sole purpose of generating clicks, subscribers or FUD.

Whenever you’re diving in any project, make sure that they are reputable and have good fundamentals. The best way to avoid falling for such projects is proper research.

Here’s some quick research tips.

  • Check the backers behind the project.
  • Check the token creator’s history.
  • Research about the technology of the project and the token use case.
  • Check how big is the community, web presence of the project.
  • Check the activity of the project’s social media and how caring they’re for the community.

And that concludes our list of Common Defi mistakes for a user, we hope it’s been helpful.

If you find our article helpful then head over to our educational section where we post such informative in-depth articles regularly.

Join us in building the future of cross chain DeFi!

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