If you would like to get involved with the DeFi space, you will need to sign up to a DeFi platform. While DeFi is still relatively, there are already hundreds of platforms available which can make it tricky to pick the best. Here, we reveal our top 10 tips for choosing the best DeFi platform in 2022.

What is a DeFi platform?

A DeFi platform is a decentralized finance application which allows users to trade cryptocurrencies or digital assets in a peer-to-peer manner. DeFi platforms are built on blockchain and use smart contracts to facilitate transactions.

The main advantage of DeFi platforms is that they are decentralized, which means that they are not subject to the same rules and regulations as traditional financial institutions. This makes them much more accessible to a wider range of users, including those in countries with strict capital controls.

DeFi aims to solve many of the problems that are apparent within traditional financial systems. For example,  DeFi platforms are often much cheaper to use than traditional financial services, as they do not require intermediaries. In addition, DeFi platforms tend to have much shorter settlement times, as there is no need for third-party approvals.

When it comes to choosing a DeFi platform, there are many factors to consider. Here are the top 10 things you should look for in a platform when choosing one in 2022.

What to look for in a DeFi platform

1. Security: One of the most important considerations when choosing any cryptocurrency platform is security. When it comes to DeFi platforms, it is especially important to ensure that your funds are safe and secure. Make sure to check that the platform uses industry-leading security protocols, such as  two-factor authentication and multi-signature wallets.

2. Usability: Another important consideration is how easy the platform is to use. DeFi platforms can be complex, so it is important to choose one that is user-friendly and has a good interface. Make sure to check out the platform’s tutorials and documentation to see if it is suitable for your needs.

3. Support: If you are new to cryptocurrencies, you may need some help getting started with a DeFi platform. Make sure to choose a platform that offers customer support in case you run into any problems.

4. Liquidity: When choosing a DeFI platform, it is important to consider liquidity. You will want to make sure that there are enough buyers and sellers on the platform to support the trading of assets. The best way to check liquidity is to look at the platform’s order book.

5. Trading fees: Another important consideration when choosing a DeFi platform is trading fees. Make sure to check what the platform’s fee structure is before you sign up. Some platforms charge a percentage of the trade value, while others charge a flat fee. Trading fees can eat into your profits- the lower the fees, the better!

6. Deposit and withdrawal limits: Another thing to consider when choosing a DeFi platform are deposit and withdrawal limits. Make sure to check what these limits are before you sign up so that you know how much you can trade. Platforms with low minimum deposits are the best option for beginners because they require you to put less of your capital at risk. 

7. Supported assets: When choosing a DeFi platform, make sure to check which assets are supported. Many platforms only support a limited range of assets, so it is important to make sure that the platform supports the assets that you want to trade. For example,  some platforms only support major cryptocurrencies, while others also support altcoins and tokens. If you want to earn income from your holdings, you will also need to check that the platform supports staking or yield farming. 

8.Decentralization: One of the main advantages of DeFi platforms is that they are decentralized. Make sure to check how decentralized the platform is before you sign up. The more decentralized the platform, the more resistant it will be to censorship and manipulation. It is important to understand that not all crypto platforms are decentralized. Coinbase and Binance are both examples of centralized exchanges that have control over your funds. Meanwhile, SokuSwap and UniSwap are both fully decentralized exchanges.

9. Governance: Another important consideration when choosing a DeFi platform is governance. Make sure to check how the platform is governed and what mechanisms are in place to ensure that decisions are made democratically.

10. Reviews: When choosing a DeFi platform, it is also worth considering its ratings. The more popular a platform is, the more likely it is to be trusted and have a good reputation. You can check a platform’s popularity by looking at its number of users and trading volume. Moreover, you can find reviews online through social media, discord channels and Reddit. 

How to know if a DeFi platform is legit?

Unfortunately, the DeFi space is no stranger to scams. Therefore, it is vital that you understand how to check the legitimacy of a platform before depositing any funds.  Here are a few things to look out for: 

1. Does the platform have a clear and concise website? 

2. Is the platform’s code open-source?  

3. Does the platform have a decent social media presence? 

4. Are there any red flags or negative reviews about the platform online? 

5. Does the platform have a valid SSL certificate

If you are unsure about a particular platform, it is always best to err on the side of caution and steer clear. You can also check out our list of top defi platforms to get started.

Frequently asked questions: 

What is the best platform for DeFi?

There is no one-size-fits-all answer to this question as the best platform for DeFi will depend on your individual needs and preferences. However, some of the most popular DeFi platforms include Coinbase, Binance, SokuSwap and UniSwap. 

How do I choose a DeFi wallet?

When choosing a wallet for DeFi, it is important to consider which features are most important to you. Some of the things you may want to consider include security, ease of use, supported assets and whether or not the wallet is decentralized. 

How to know if a DeFi platform is a scam?

The best way to know  if a DeFi platform is a scam is to do your research. Make sure to check the platform’s website, social media presence and online reviews before you deposit any funds. If you are unsure about a particular platform, it is always best to err on the side of caution and steer clear.

Jun 21, 2022
DeFi Education

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