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With the support of DeFi, deep cultivation of income has developed into the most popular industry in cryptocurrency. In a highly volatile market such as cryptocurrency, it is important to seize the opportunity to make money and find areas with high liquidity. Therefore, deep cultivation of income can almost guarantee high returns, and liquid mining has attracted a large number of market participants to enter DeFi. space.
The explosive growth of DeFi coincides with the boom of ICOs in 2017; however, in DeFi, projects emerge quickly, and without the need for code reviews of the project owner, the project can begin to sell the product to others.
This has led to hackers launching multiple attacks on DeFi projects this year. If someone puts forward other opinions on the code, they can actually avoid such attacks.
Before the launch of the ICO project, there were many requirements before the token sale, such as code review, security inspection, legal advice, identity verification of project team members, and so on. Investors will take and verify these steps seriously. Therefore, in high-return projects such as DeFi, people should be more cautious about important aspects such as the underlying smart contract and technology of the protocol.
However, it is not.
According to the latest survey done by the crypto asset analysis platform (Yield Farming), 40% of liquidity providers do not know how to read smart contracts, nor do they know the risks that any given agreement may bring.
The report states: “What shocks us (or may not be shocked) is that a large number of participants do not know how to read smart contracts (40%), or even what is permanent loss (33%), which means they Don’t know the actual rate of return on investment, and take risks in order to get high returns. Perhaps this is why 49% of participants are usually not vigilant about unaudited smart contracts and rely only on smart contract auditors to check the security of the contract “.
The recent security of DeFi protocols (such as Yam Finance and Soft Yearn.Finance) has fully demonstrated the need for participants to conduct due diligence between high rewards and high risks such as DeFi.
Even after the public review, security companies such as PeckShield have repeatedly warned against entering DeFi without prior research, because accidents may still occur after the review.