How to invest in decentralised finance (DeFi)

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Blockchain technology has created an alternative financial infrastructure in which there are no banks, intermediaries or barriers to entry. DeFi has transformed the logic of capital investment, freed up access to income protocols and eliminated trust as an essential requirement. Investors communicate directly with the code, the assets and the smart contracts. To understand how to invest in DeFi, you need to master the logic of the autonomous economy, which is based on transparency, mathematics and software architecture.

What is DeFi and how does it work?

DeFi (Decentralised Finance) is a system of financial services based on open protocols. Its main function is the automation of transactions via smart contracts. Due to the lack of centralisation, users manage their assets independently and communicate directly with the platforms.

Investors who learn to invest in DeFi work with decentralised exchanges (DEX), staking, farming, lending protocols, stablecoin platforms and DAOs. Asset management is done without registration or KYC, and transactions remain the sole responsibility of the owner.

First step: how to start investing in DeFi

Before investing in DeFi, it is important to determine which blockchain the protocol you are interested in is based on. Ethereum, BNB Chain, Arbitrum, Optimism, Avalanche: each solution has its own speed, gas fees, liquidity and number of projects. On the Ethereum network, for example, the cost of a transaction can vary from £3 to £25, depending on the load. Layer-2 solutions reduce the commission to a few cents while maintaining the same level of security. The choice of network depends on the capital, the frequency of transactions and the investment objectives.

How to choose a protocol: statistics and security

To understand how to invest safely in DeFi, you need to use objective assessment criteria. The priorities are the volume of locked funds (TVL), the age of the project, the reputation of the team, the frequency of audits, and resistance to attacks. Protocols with a TVL of $500 million, which have passed at least two independent audits and have been operating for more than 18 months without critical incidents, fall within the trust zone. Examples include liquidity pools, lending platforms, and yield aggregators. By analysing this data, investors minimise the risk of capital loss due to code errors or hacker attacks.

Key investment strategies in DeFi

DeFi offers a wide range of strategies with different risk profiles. It is important to consider the duration of the investment, the volatility of the tokens and the possibilities for reinvestment.

Key areas:

Staking: locking tokens in smart contracts to earn a percentage. Examples: ETH 2.0, ATOM, AVAX. The return varies between 5% and 12% per year.
Yield farming: providing liquidity to common funds, resulting in the acquisition of LP tokens and rewards. Popular platforms: Curve, Balancer, PancakeSwap.
Lending and borrowing: interaction via the Compound and Aave protocols. Income is generated from the interest paid by borrowers.
Aggregators: automated platforms that optimise returns (Yearn, Beefy). They simplify complex strategies.
Launchpads and IDO: participation in the early placement of tokens via DAO platforms and launchpads.

Interaction with DEX: trading without intermediaries

By learning to invest in DeFi, investors gain access to decentralised exchanges such as Uniswap, SushiSwap and TraderJoe. DEXs operate without an order book but use automated market makers (AMMs). Liquidity comes from users and the price is determined by an algorithm.

A special feature is the absence of custody. The trader does not transfer the tokens to the exchange but only grants temporary access to the contract. This eliminates the risk of account blocking or asset withdrawal. However, low liquidity or slippage can affect the outcome of the transaction.

Stablecoins and capital protection

Stable tokens pegged to fiat currencies play a crucial role in the DeFi infrastructure. Investors use stablecoins such as USDC, DAI, and USDT to access protocols, place in pools, or participate in staking without volatility. To choose the right assets and understand how to invest in DeFi, you need to consider the stablecoin’s reserve model: fiat (USDC), crypto-backed (DAI) or algorithmic. High transparency and regular reporting are criteria for reliability.

How to invest correctly in DeFi: risk assessment

DeFi involves technological, market and operational risks. Frequent attacks via flash loans, code errors, outdated libraries and excessive APRs require systematic assessment.

To understand how to invest in DeFi without losses, you should:

use multiple signatures and hardware wallets;
limit investments in unregulated protocols;
apply diversification;
monitor token behaviour through blockchain analysis.

It is also important to consider the influence of the cryptocurrency context, especially when the value of the underlying assets declines. For example, the sharp decline in the ETH price in 2022 led to the collapse of collateral in dozens of DeFi protocols.

How to choose a wallet for working with DeFi?

When choosing a tool for storing and managing assets, you need to consider network compatibility, security, and compatibility with dApps. Before investing in DeFi, the investor links the wallet to the smart contract, where the assets are registered in the protocol. For active transactions, the MetaMask, Rabby or Trust Wallet extensions are used. Hardware devices such as Ledger offer protection for large amounts of capital. The wallet interface must support multi-network operations, notifications, staking support and contract-level limit approval.

Errors when signing transactions, unrepealed authorisations, and connection to phishing dApps create a risk of hacking, even when using a high-quality DeFi protocol. Therefore, before investing in DeFi, it is necessary to test each connection in an isolated browser and manually check the addresses.

Legal aspects and tax burden

Decentralisation does not relieve you of your responsibility. DeFi profits are subject to tax regulations. In various jurisdictions, income from farming and staking is classified as investment income. Failure to comply with tax reporting requirements will result in penalties. It is necessary to study local legislation, especially in countries where reporting on digital assets is mandatory. The use of anonymous wallets, offshore DAOs and uncertified tokens can lead to blockages or lawsuits when transferring money to fiat.

To illustrate, here are some examples that show how you can invest in DeFi with a reasonable level of risk and a reasonable strategy:

In 2021, a user deposited $10,000 into the USDC/DAI common fund on the Curve platform. The total return over 12 months was 13.8% without any changes in the exchange rate.
The investor distributed £5,000 across the Aave and Compound platforms and earned 7% per annum on the loans.
By investing £2,000 in the Uniswap token (UNI) and staking it in the ecosystem before it was listed on centralised exchanges, the return was 85% in 9 months.
The DAO Curve participant received governance tokens and sold them after voting on an important parameter, earning £1,400 in the internal economy.

These examples show that understanding the architecture, protocol logic and tokenomics makes it possible to scale capital safely.

How to track the effectiveness of the DeFi portfolio

To understand how to invest in DeFi, you need to regularly audit the portfolio. Services such as DeBank, Zapper, and Zerion add information about investments, accrued interest, and contract status. The platforms display the APY, asset value, and changes in positions in real time.

To manage risks, it is recommended to track the following:

LTV (loan-to-value) when issuing loans;
temporary losses in liquidity funds;
portfolio activity and authorisation history;
fluctuations in the stablecoins involved in the strategies.

Any deviation from the expected parameters requires immediate correction. The connection with the control panel and contract analysts strengthens control over capital.

DeFi outlook: where is the market headed?

The sector is growing. The number of unique wallets interacting with DeFi has exceeded 7 million. By 2025, solutions based on zk-Rollup, RWA platforms (tokenisation of real estate, securities) and hybrid protocols with CeFi features will appear. The development of DAO and voting based on participation in management reinforces the importance of long-term token ownership. New standards for smart contracts minimise risks. Therefore, understanding how to invest in DeFi remains an important skill for investors.

Is it worth investing in cryptocurrencies now?

The cryptocurrency segment continues to attract the attention of investors at all levels. The wave of cyclical growth, technological improvements and the emergence of new asset models raise the age-old question: is it worth investing in cryptocurrencies now? Against the backdrop of turbulent stock markets, geopolitical tensions and falling returns on traditional instruments, digital assets are once again a source of controversy. Some call it a bubble, others call it a transformation of global finance. Evaluation should not be based on emotions, but on calculation.

Market realities: Is it worth investing in cryptocurrencies now?

Before choosing an asset, it is necessary to analyse the current state of the sector. Digital assets are increasingly attracting institutional interest, but they are still very volatile and subject to regulatory policies. The main factors influencing decision-making:

Market capitalisation: over $2.1 trillion, dominated by BTC and ETH.
Regular cycles of halving and exaggeration. The impact of the Federal Reserve interest rates and US monetary policy on the profitability of cryptocurrencies.
Participation of large platforms and banks in pilot projects.

In this context, a novice investor is faced with a paradox: high profitability and great uncertainty. In this contradiction lies the core of the question: is it worth investing in cryptocurrencies if the market does not react logically, but at the speed of news?

Benefits of cryptocurrencies for investors

The unique nature of digital assets is reflected in their decentralized nature, high liquidity and global availability. These features make them an effective addition to a portfolio, especially for diversification and hedging. The main advantages of investing in cryptocurrencies:

Independence from banks and government institutions.
High potential profitability with the right entry point.
24/7 liquidity without weekends or holidays.
Option for shared ownership.
A wide range of projects, from simple tokens to DeFi and NFTs.

For example, Bitcoin has grown from $3,800 to over $65,000 in 3 years, while Ethereum has grown from $100 to $4,800. Such figures are virtually impossible with traditional assets. But the same growth rate leads to an equally rapid decline.

Disadvantages and vulnerabilities: Is it worth investing in cryptocurrencies now?

Every advantage of the digital environment has its disadvantage. High returns come with high price volatility, unstable regulations and limited consumer acceptance. The main disadvantages of investing in cryptocurrencies:

Lack of fundamental valuation.
Vulnerability to bans, sanctions and changes in the tax base.
Many frauds and fake projects.
Technical issues: wallet, security, configuration.

Frequent protocol errors and vulnerabilities (e.g. attacks on exchanges and DeFi services) determine the image that cryptocurrencies are a toxic segment. The question of whether it is worth investing in cryptocurrencies is often not so much about motivation, but about understanding the complexity of the technology and the extent of the risks.

Profile of a novice investor: Where to start without mistakes

To get off to a good start, it is important for a beginner not only to buy a coin, but also to develop a strategy. Without preparation, the crypto market becomes a trap. A beginner’s guide to investing in cryptocurrency starts with choosing the right platform, currency, and wallet, and determining your goals.

Market entry stages:

Objective analysis: speculation, savings, portfolio.
Choosing an exchange: license, interface, fees.
Storage configuration: cold/hot wallet.
Project research: whitepaper, team, tokenomics.
The investment volume is up to 10% of the portfolio.

This approach helps to limit losses, minimize emotional mistakes, and develop a sustainable behavior pattern. Without it, a beginner loses capital in the first waves of correction or gets caught up in fraudulent projects.

Volatility and profit

The dynamics of cryptocurrency exchange rates can work both ways. During a day, the price of Bitcoin fluctuates between 2 and 7%, and that of Ethereum between 3 and 9%. When trading with leverage, any deviation can turn into a disaster or a huge profit. High volatility is an important factor in determining whether it is worth investing in cryptocurrencies at this time.

Examples of daily fluctuations:

BTC: $65,000 → $62,400 → $67,300.
ETH: $3,300 → $3,150 → $3,420.

These numbers give the impression of quick profits, but also attract a gambling style of trading. For a professional approach, it is necessary to use limit orders, drawdown calculations and set profit targets. Only then does volatility become an advantage.

Security and custody: what protects investors in the digital environment?

The technological complexity of cryptocurrencies requires attention not only to profit, but also to security. Lack of reversibility of transactions, attacks on exchanges, phishing and vulnerabilities in smart contracts make security a top priority. A single typo in the address or connecting to a wrong interface can result in a complete loss of assets. The question of whether it is worth investing in cryptocurrencies loses its meaning if the user has no control over its infrastructure.

Key elements of protection:

Cold wallet: Ledger, Trezor – protects keys from online threats.
Mnemonic: Backup access.
Two-factor authentication (2FA).
Unique passwords and password managers.
Checking permissions in smart contracts.

In practice, it is often not the hackers who breach security, but the actions of the users themselves. Therefore, proper storage configuration and operational discipline play a key role in capital protection. Without this, any profitability loses its meaning.

Regulation and legal uncertainty

The attitude of states towards cryptocurrencies remains ambiguous. In some places there are bans, in others there is infiltration into financial systems. The legal position of the investor depends on the jurisdiction. When analyzing whether it is worth investing in cryptocurrencies, it is therefore necessary to consider the legal side.

Regulatory features:

In the EU: recognition of cryptocurrencies as assets and regulation via MiCA.
In the US, there is uncertainty between the SEC and the CFTC as to whether it is classified as a commodity or a security.
In China, there is a total ban on its distribution and trading.
In Russia, there is recognition in the context of digital rights, but there are restrictions on payments.

The lack of a universal approach creates an unstable environment. The smallest statement by an official can change the market trend. This entails additional risks, especially for short-term positions or positions with large capital.

Market and psychology: what determines the entry point?

The crypto market is very sensitive to the information context. Every news item, whether it is a tweet from a major investor or a report from a regulator, is immediately reflected in quotes. This creates a speculative character and reinforces the role of the audience. Behavioral economics plays a crucial role in this segment.

Psychological traps:

FOMO (fear of missing out): access is at the top.
Panic selling: mass exit during a crash.
Overtrading is excessive activity without a strategy.
Herd behavior means following the majority.

Portfolio and diversification: how cryptocurrencies fit into your strategy

Cryptocurrencies are no longer an isolated asset. Investors include them in a diversified portfolio to increase the total return potential. The ratio of digital assets must be adjusted based on goal, age, income and horizon.

Example of structure:

50% – stock market (ETF, bonds);
20% – real estate and alternative assets;
20% – cryptocurrencies (BTC, ETH, stablecoins);
10% – high-risk assets (DeFi, early-stage tokens).

This structure ensures less volatility while preserving growth potential. At the same time, the benefits of cryptocurrencies are reflected in holding them for the long term, rather than trading them. The buy-and-hold approach yields better results than constant speculation.

Is it worth investing in cryptocurrencies? Conclusions

The cryptocurrency market presents unique opportunities, but also unique threats. The answer to the question of whether it is worth investing in cryptocurrencies depends on your understanding, discipline, goals, and planning horizon. The market continues to evolve. Protocols are expanding, adoption is increasing, and regulations are becoming more efficient. This means that digital assets have already taken their place in the global financial system.

June 3, 2025

Which cryptocurrency should you invest in in 2024/2025?

2024-2025 promises to be an important period for the crypto market. The world is on the eve of major changes, and choosing the right cryptocurrency to invest in can be crucial to your financial success. The cryptocurrency market is constantly evolving: new technologies, upgrades to existing coins, and growing interest from institutional investors create new profit opportunities,

In this article, we will tell you which cryptocurrency to invest in in 2024 and 2025, how to avoid losses and increase your chances of success.

Crypto market forecasts: what to expect from Bitcoin and Ethereum in 2024-2025?

Bitcoin and Ethereum are two cryptocurrencies that have long led the market. But in conditions of volatility and rapid changes, a logical question arises: which cryptocurrency should you invest in?

Bitcoin remains the main indicator of the state of the market. After a decline in 2022, when the price dropped below $20,000, the situation stabilized and the price started to rise again. Experts predict that Bitcoin could continue its upward trend in 2024, especially given the possible increase in interest from large institutional investors and the prospect of the halving (a reduction in the block reward for miners, which is expected to take place in 2024).

Ethereum also continues to attract more and more attention. After successfully switching to the Proof-of-Stake (PoS) consensus mechanism in 2022, the network has become more energy-efficient and scalable. The ecosystem is actively expanding thanks to the development of DeFi, NFTs, and other innovative projects. Despite competition from other blockchains, Ethereum maintains its position thanks to its strong developer community and wide range of features. ETH is expected to experience steady growth in value in 2024/25, especially given the growing interest in staking and the development of second-layer solutions such as Optimism and Arbitrum.

So, what should you buy in 2024: Bitcoin or Ethereum? The decision depends on your goals and strategy. Are you looking for stable growth with less risk? Then choose Bitcoin. If you want to invest in innovation and high-tech prospects, then Ethereum offers the best opportunities.

Bitcoin in 2024-2025: maintain leadership or lose ground?

After the wild price swings that characterized Bitcoin, investors are asking: Can the coin maintain its lead? In 2024, this question is especially relevant, as many analyze its behavior in the run-up to the next halving. Over the past five years, the coin has proven that it can recover. For example, in 2021, the price reached an all-time high of $68,000, after which it fell back to $40,000 in 2023. Today, the price is above $95,000.

What factors can influence the price of an asset? First, it’s status as ‘digital gold’. If the economy continues to face inflationary risks, Bitcoin will become more attractive to investors looking for long-term investments. But the biggest risks are high volatility and regulatory uncertainty.

Factors that will influence the price of Bitcoin in 2024-2025:

2024 halving: After the event, the price may increase as the supply of coins decreases.
Global economic instability: In an inflationary environment, an investment is often considered a haven.
Government regulation: Any changes in legislation can positively or negatively impact the cost.

Keep these nuances in mind when considering investing in Bitcoin.

Ethereum in 2024-2025: Smart Contracts and Further Evolution

Ethereum is likely to be one of the cryptocurrencies for long-term investment in 2024/25. Thanks to the upgrades to Ethereum 2.0, transactions will become cheaper and faster. Energy consumption will also be reduced, which is attractive to environmentally conscious investors. At the same time, the growing interest in DeFi and smart contracts further strengthens the asset’s position.

Despite increasing competition, Ethereum remains a pioneer in the blockchain world and offers investors unique growth opportunities in the coming years.

Altcoins to invest in 2024-2025: are they worth the risk?

Which cryptocurrency should you invest in if not Bitcoin or Ethereum? The answer is not so simple: altcoins are becoming increasingly attractive to investors who are looking for a quick way to make money while taking more risk.

Solana, Polkadot and Cardano coins offer good prospects, but also come with high risks. Solana remains one of the most innovative platforms for decentralized applications, despite its complex network issues. Polkadot combines multiple blockchains, making it unique in its niche. Cardano offers a research-driven approach that appeals to long-term investors.

Promising altcoins can provide investors with higher returns; however, due to the volatility of these projects, it is important to carefully analyze their potential before investing.

How to choose a cryptocurrency to invest in 2024 and 2025?

It is important to realize that every project has strengths and weaknesses. Which cryptocurrency should you invest in in 2024 and 2025? We are happy to give you a few tips.

First, pay close attention to the technology behind each project. For example, Ethereum attracts investors thanks to its smart contract technology, while other currencies offer different competitive advantages. Assess how these technologies can help you solve your problems.

Second, it is important to consider the reputation of the team. No matter how good the technology is, without a strong team and a sustainable strategy, the project has no chance of success.

Importance of analysis: price, technology, community

The most important parameters to pay attention to when choosing a cryptocurrency to invest in are price, technology, and community. The price of a cryptocurrency can give an indication of the current demand, but you should not rely on this factor alone. Technological innovations such as transaction speed, low costs, and scalability are essential for long-term success.

Risks of investing in cryptocurrencies: Should we be afraid of losing money?

Volatility is the most important aspect to consider. In 2024-2025, we can see the rise and fall of major cryptocurrencies, which brings both opportunities and losses. In addition, unstable regulations in different countries and technological failures can reduce the value of currencies. It is important to be prepared for unwanted, but still possible, market shocks.

Diversification is the best way to minimize risks. By investing in multiple cryptocurrencies, you reduce the chance of significant losses. In addition, use analytical tools and monitor trends to avoid making wrong decisions.

Conclusion

To invest successfully in 2024 and 2025, it is important to consider current trends, technological innovations and risks.

Which cryptocurrency should you invest in in the even more distant future? The answer depends on your goals and your willingness to take risks. Bitcoin and Ethereum remain stable long-term assets, while altcoins Solana, Polkadot and others offer more room for growth.

Strike a balance, make informed decisions and don’t forget to keep an eye on the crypto market.

June 3, 2025