DeFi

Platforms listed under the Decentralized Finance (CeFi) category must meet the following criteria:

  • no KYC process
  • self custody of crypto assets

List of DeFi platforms covered on this site

Decentralized Exchanges (DEX)

Decentralized exchanges have no intermediary, and do not require identity verification. This means users can just sign up to the platform and start trading immediately.

Considerations before investing in a DeFi project

Audit

It should be safer to invest in projects that are audited.

Entry time

If the macro environment is bearish, even getting in early for a DeFi project might not yield good results.

Gas fees

Projects with low gas fees is more conducive for frequent harvesting of farm yields. Low gas fees also allows flexibility to switch between liquidity pools.

Hack history

Check if the project has suffered from any hacks or exploits

Investors

Check out who are the investors of the DeFi project. Projects with reputable investors are probably safer from rug-pulls as I believe these investors with good track records would have done their due diligence into checking the viability of the project and the credibility of the DeFi project team.

Research on competing projects on the same blockchain

I would go to https://defillama.com/chains to check which is the dominant project for the particular blockchain the DeFi project is operating in. Does it have any competitive advantage? It might be better to invest in the dominant project.

Rewards APR/APY

If the reward rates are not high, I would rather convert my assets into stablecoins and place them into HODL platforms. I am taking a calculated risk by investing in DeFi projects where the price action of the reward tokens can be very volatile.

Tokenomics

  • I avoid projects where a large percentage of the tokens (>10%) are reserved for the project team. I feel such projects are more susceptible to dumping.
  • The tokens for the project team and early investors should also be locked and linearly released over years to ensure their commitment to the project.
  • I prefer deflationary projects where there is a cap on the maximum number of tokens.