One of the problems faced by crypto holders and users is the issue of hacks. This has also been witnessed in DeFi (decentralized finance).
In this post, we’ll share useful tips on how not to get hacked in DeFi land. Before then, let us know more about DeFi and hacks in the crypto space.
What is DeFi?
Decentralized finance (DeFi) is an emerging model for organizing and enabling cryptocurrency-based transactions, exchanges and financial services. DeFi’s core premise is that there is no centralized authority to dictate or control operations.
What is a Crypto Hack?
A crypto hack involves hackers accessing and stealing your crypto coins without your authorization. There have been several hacks in the crypto space which include exchanges, wallet users, etc.
The issue of hack has also been witnessed in decentralized finance (Defi).
Read– DeFi Tokens Investors Can Consider In July
Tips for Staying Safe in Defi
1. Know what kind of danger is lurking
There are lots of ways that things can go wrong. So, what’s the difference between a hack, an exploit and a rug pull? A hack is simply any unauthorized entry into a system. Smart contracts are made of code, and code can have bugs. If a bug is abused, meaning the code is made to do something it wasn’t meant to do, then that’s an exploit. An exploit can be combined with other measures to hack a system.
A rug pull, meanwhile, is straight-up fraud. It’s when someone is induced to invest capital under false premises. A centralized exchange might have lots of safeguards and a security team to look after your funds, but the downside is you don’t onknow what they’re doing. You might not even know if they’ve been hacked if they don’t choose to tell you.
With DeFi, the moment a project is hacked, the community takes notice and rapidly mobilizes. It’s very difficult to cover up a hack on Defi.
2. Get a hardware wallet
When your crypto wallet is on your computer, that’s also where your private keys live. Your private keys unlock your wallet.
To make things more secure, you should get a hardware wallet and have your private keys live there.
3. Watch out for big token holdings in a new project
The great thing about blockchains is that all the information is public. Before buying into a project, check out how the tokens are distributed using a block explorer (Etherscan is the most popular one on Ethereum).
If you see tokens concentrated in one or two wallets, it’s probably a red flag unless there’s some explanation why.
4. Don’t despair
If you do run into trouble, know that you’re not alone. Even the most conscientious user can lose their funds. If you’ve had your account hacked, you can’t hurt yourself but learn from it.
Closing Thoughts
It is very important to make research in crypto and its elements before putting resources into it. This will help to solve the issues attached to it.