How safe is a DeFi wallet?

Asked 2 years ago

Hi, I want to start participating in the DeFi world, however, I read that I would need to open a Web 3 wallet that is interoperable across DeFi protocols and some blockchains. But this made me wonder, how safe does that make my wallet?

Geovanni Mcfarland

Thursday, April 14, 2022

Talking about safety, there is hardly a holy grail. The most crucial thing to keep in mind is to protect your private key, and only connect your wallet to exchanges or websites you trust. If safety and holding your funds for the long term is your goal, you may want to consider buying hardware wallets such as Ledger NANO, Trezor, Keepkey, or Safepal. These will allow you to store your funds safely and keep them unreachable by hackers who often target hot storage like wallets when you connect to malicious websites. Web 3.0 wallets are not so safe and they are comparable to every other wallet you can find out there. However, you need these wallets like Metamask to interact with DeFi platforms and enjoy the benefits of staking, swapping, etc. Web 3.0 wallets can also help secure your information if you want to enjoy true privacy. If you keep your funds on an exchange, your identity is somehow connected to your transactions. Most Web 3.0 wallets do not ask you for KYC. Developers would also need Web 3.0 wallets to launch smart contracts on the blockchain. To know trusted websites, audited contracts, and KYC proofs are the best things you should check for. If the platform hasn't done any of these, then it is less reliable.

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