Crypto hacks and DeFi exploits are constantly making news headlines and even though it’s not good news, it’s definitely understandable. This is still very much a “new technology” and there is still a lot that needs to be improved upon, and to some extent, perfected. Not that we will ever be able to fully escape this danger, but it is likely to improve as the sector matures. Fortunately, many DeFi projects that have been hacked have also found ways to compensate users. Even though the compensation plans are not necessarily comprehensive, they do help to alleviate the pain to some extent. This is a reality that needs to be fully embraced when entering into DeFi investments. The nature of DeFi is already inherently risky. When you factor in how young and vulnerable the technology is it becomes even more apparent.
No matter how many times you warn new market participants regarding the potential risks associated with DeFi, many choose to ignore the heads-up. It’s as if they have selective hearing and choose only to pay attention to the juicy gains on offer and to hell with the rest. Every investment vehicle has its own risk/reward ratio. Potential investors need to realize that this dynamic is relative. In other words, the greater the return, the greater the risk factor. If you want to enjoy high APRs then you have to be comfortable knowing that your capital is at risk. Observing only one side of the coin is evidence of an extreme lack of maturity. In my opinion, such participants should not be handling their own capital. They would be better served to entrust a professional with the task.
A Common Occurrence
Hacks are simply something that Crypto investors have to learn to live with. In a similar way, surfers have to live with the risk of shark attacks. If they want to ride the waves then they have to accept the potential risks associated with marine life, specifically, sharks! Security will develop over time and become somewhat more robust and effective. However, development takes time, and though exploits are likely to decrease in time, we are likely to continue experiencing these tragic events. This is where investors need to draw a line in the sand. Either, you accept the associated risks, or you simply choose to avoid the space until such a time as there is significant maturation and a reduced rate of fatalities. The negative side to waiting is that the “significant gains” will most likely be over. Remember, with greater risk, comes greater reward. Once again, everything is relevant.
As long as you make informed decisions, Backed by an acknowledgment of the potential risks involved, then you can face whatever comes your way. Investors who simply choose to ignore the risks, only to focus on the potential gains are setting themselves up for disappointment. Hacks and exploits are part and parcel of the Crypto space. Either accept it or choose to swim in another pond, it’s that simple.