Risks

However, as with any investment, venturing into DeFi and cryptocurrencies comes with its share of risks. The volatile nature of cryptocurrencies can lead to significant financial losses. For instance, the infamous Bitcoin crash of 2018 saw the cryptocurrency's value plummet from nearly $20,000 to just over $3,000 within a year, leading to substantial losses for many investors.

Moreover, the DeFi space is still relatively new and unregulated, making it a fertile ground for scams and fraudulent activities. One notable example is the 2020 DeFi project YAM, which collapsed within two days of its launch due to a bug in its smart contract code, resulting in a total loss for its investors.

Therefore, it is crucial for potential investors to thoroughly understand the DeFi space and the associated risks before diving in. This involves conducting comprehensive research, staying updated with the latest developments in the DeFi space, and possibly seeking advice from financial advisors or experts in the field.