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THIS week’s Crypto Corner focuses on the dangers of decentralised finance platforms and the need for mitigation of risk.
The crypto space is a great ecosystem that can be rewarding, and we have built the Moneybrain ecosystem to cater for those who are new to the world of crypto. Our offer brings a “walled garden” where people can “smell the crypto flowers” without being exposed to the riskier protocols such as CoW Swap.
While decentralised finance can be exciting, hosting famous crypto meme coins such as Trump coin, it isn’t without its risks. Given this, the typical transactions seen in the DeFi space are lower than the centralised and more trusted DeFi exchanges which balances the risks of being out in the crypto Wild West.
AAVE, a popular online (fully decentralised) crypto exchange reported that a user had attempted to buy $50 million worth of AAVE, its native currency, using Tether’s stablecoin $USDT using the $SwapCow protocol.
The safeguards were in place to warn about moving forward with the transaction. Because of the lack of AAVE liquidity relevant to the size of the transaction, the protocol returned a quote and AAVE warned “high price impact”.
The user affirmed they were happy with this and they were exchanged 36.23K worth of AAVE for their $USDT50m. The AAVE example is a hallmark of the “decentralised Wild West” where guardrails exist but the risks of getting it wrong far exceed those of the risks in an ecosystem such as Moneybrain’s. The founder and chief executive of the platform has since confirmed they will be returning the fees collected from the transaction of USDT600K but there isn’t much that can be done for the trade itself as the quote and slippage rate were both accepted by the user.
The moral of the story is simple. If you are a beginner in crypto, start with a beginner-friendly platform, such as Moneybrain, which limits exposure to the risk-iest of the crypto world.
Download the Moneybrain app today on Android or Apple.
