Just to be clear, this is more of a fact finding post versus an informative one. Like many of you, I am quite new to this whole DeFi thing and I am trying to find my way through it all. I know a lot of you are in the same boat, and I am hoping that some people can chime in on the comments of this post to maybe answer some of the questions I have.
As I wrote in my post yesterday, I have been digging into DeFi a bit more lately. I have some passive income streams that are currently paying off pretty well for me and that has given me the freedom to explore this (not so new) trend in crypto.
Again, like many of you, I got my start with our very own Cub DeFi. It has been a great learning too, but there are still some things that I don't quite understand. It almost doesn't feel risky enough because we are so familiar with the team behind it and the great work that they have been doing for us.
From Cub DeFi, I found my way in to PancakeSwap which I also mentioned yesterday. The price of the CAKE token is pretty attractive right now, so I have been trying to stack that through some of the farms though the going is slow.
Finally, yesterday I read someone's post and they mentioned PantherSwap. I figured, "no risk no reward right", so I moved some of my BNB into a couple of swaps and then pooled some liquidity in to the farms there. At the time, some of the farms were pulling in like 5000% APR, so why would you not. With my small amount invested, I think I pulled in about 30 tokens just over night.
Of course since then, the APR has dropped to the 3000% range (listen to me complaining about 3000%!) and the price of the token has dropped from about $3.20 to $2.20 or so.
This whole dive into PantherSwap got me thinking... I know about rug pulls, I think we all know about those. They get the biggest headlines and the rekt the most people, but what are the other hazards of DeFi?
What are the less severe things that can really hurt you if you have money invested in a farm or a pool. I am assuming if you are dealing with a pool/den, the native token price dropping could be a really bad thing.
What about farms though? This is where my knowledge is lacking. As I said, I am hoping someone can fill in the gaps for me in the comments. Preferably in a clear/concise way. Think DeFi for Dummies.
I know I read something at one point where the author was talking about the price of one token in a liquidity pair going up and the other going down and how that can hurt your investment. I don't quite understand how though.
Are there any other pitfalls to entering into DeFi that I or anyone reading this should know about?
With so many platforms popping up all over the place, it is hard to know which ones to trust. I think we are all so worried about the big rug pull that we might miss some of the smaller warning signs of a bad DeFi platform.
I look forward to seeing the replies to this and I hope that the comments on this post will serve to educate both myself and any others who stumble upon it.
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