A jungle may appear to be defi lending platform. However, it is possible to go through it and emerge victorious, given the right attitude. This is what to do to ensure that you are not merely wandering without purpose.

To begin with, do not blindly believe the hype. Excitement about platforms that promise high returns is easy, however, one should do the research. That high APY you see? It’s not guaranteed. Platforms are allowed to adjust their rates according to the market and some may even decide to do so without any prior notice. Be alert then of any indications that the platform is stable, or, otherwise, be in readiness to make a swift exit.

The other consideration is the collateral you are putting up. In most platforms, the loan you can borrow is determined by the quantity of crypto you have lent. It may seem like you are a boss who is lending out $10K worth of crypto, but it is important to remember that should the price of that crypto fall precipitously, you will be forced to pay additional collateral or get liquidated. Be aware of the risks. Watch the market. You do not want to look into your portfolio and find a surprise.

Let’s talk fees. They are able to creep upon you as a sudden lunch bill. The transaction fees, withdrawal and platform fees are only but a few that will find their way into your profits. Keep an eye on the fine print. There are those sites that are transparent about their prices and others… well, you will find the answer after placing an order. Therefore, whether you are going to or not, read the terms and conditions before committing yourself to anything.

The better the better you diversify. Do not put your eggs in one basket or one kind of an asset. Diversify on various platforms and currencies. This will cushion you in case one of the platforms can fall in trouble or one of the assets crashes. Being diversified does not only help to minimize risk, but it provides a lot more opportunities to make.

Finally, it is also important to check the security measures. What a nightmare- lending out your assets and finding out that the platform has been hacked. It is as though you were chaining your house and putting keys under the doormat. Platforms with such features as two-factor authentication (2FA) and other protection types should be given the first priority. Although none of the platforms is absolutely safe, some are certainly more attentive than others.

Overall, DeFi lending can become a potent instrument, although not a game to play by the weak. Be aware, have a keen eye on the market and do not be afraid to leap out in case something does not look right.