5 Reasons Why Upcoming Cryptocurrency Startups Should be Cautious of DeFi

The birth of the DeFi world occurred in 2017, a few months after the full launch of the Ethereum platform. Since then, DeFi has been growing at an accelerating rate, with new projects launching every month. But, starting a DeFi project requires a lot of research and development expertise. The founders need to research the DeFi space and how to launch successful projects. However, after serious research, founders should still be very careful when considering creating a crypto startup. But why should crypto startups be cautious of DeFi? Here are the five reasons. Blockchain Risks DeFi largely depends on how the host blockchain infrastructure operates. If the host blockchain has some problems, all the DeFi projects will face a similar problem. For instance, DeFi projects suffered from Ethereum’s low scale and high gas fees. Moreover, there are other compromising factors in blockchains. Blockchains using proof of stake mechanism could fall into the issue of validator cartels. A validator cartel is when multiple network validators conspire to control reward distributions in a blockchain. They end up affecting all DeFi protocols operating under the blockchain. Hence, when starting up crypto projects, founders must be careful with the choice of Dapp host blockchain. DeFi is Prone to Attacks Another reason for startups to be careful when dealing with DeFi is the attacks. The DeFi space is prone to different types of attacks that could...