Back to: DeFi 101
Everything in this path compresses into one operating system. Print this lesson. Follow it until it’s boring — boring is the goal.
Before any protocol touches your money
- Verified contracts + named team (or credible anon track record)?
- Audit exists, criticals fixed, code unchanged since?
- TVL real and distributed (not one whale + emissions)?
- Yield source explainable in one sentence?
- Oracle, admin keys, and upgrade powers identified?
- Bridge/custody assumptions listed and accepted?
Two “don’t knows” = don’t deposit.
Position rules that survive crashes
– Size by ruin: no single protocol holds enough to end you. Beginners: cap experimental DeFi at money you can lose smiling. – Stablecoin base: keep reserves in boring stables across two issuers; risk assets are for risk budgets. – Leverage is a profession: spot first, always. If you touch perps or looping, that’s a separate education with preselected tuition (your money). – Exit rehearsed: know the unwind clicks (unloop, repay, withdraw) before the panic — cascades don’t wait for tutorials.
Ongoing hygiene
– Revoke stale token approvals quarterly. – Separate wallets: vault (cold), operations (hot), experiments (disposable). – Track everything for taxes from day one — explorers forget nothing, and neither do tax agencies. – Re-read your positions monthly: rates, health factors, unlock calendars.
The course in one page
- DeFi replaces bankers with code — the code is the counterparty.
- Trade on deep liquidity with tight slippage; aggregate for size.
- Borrow conservatively against boring collateral; watch health factors.
- Stablecoins differ by backing — diversify issuers, discount yield.
- Trace every APY to its source; unsourced yield is someone’s exit.
- Audit the money path; approve sparingly; bridge lightly.
Congratulations — you understand DeFi better than most participants. The
> market pays a premium to the careful and collects it from everyone else.
> Stay in the first group.
Keep going: score the chains behind these protocols on the terminal, or take the Decentralization Analyst path path.