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Decentralized finance is a constantly growing market, which has reported higher interest rates and yields than the traditional financial sector.
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Favorite Target of Hackers DeFi Development Services applications can manage a lot, a lot, of money in their smart contracts. This makes them a target of interest to cybercriminals, who are on the trail of businesses vulnerable to inadvertent attacks.
Inadvertent or intentional encoding error Smart contracts make it possible to execute vital operations for these platforms, such as money transfer, token custody or credit settlement. An error in coding a smart contract could lock up customer tokens with no possible solutions. Also, malicious entities that make life in the ecosystem, could use their contracts and the inexperience of users, to get hold of money from their customers without them noticing.
Frauds Due to the explosion in popularity of DeFi Development, phishing attacks (identity theft) or fraudulent platforms that seek to replace the original ones have also increased. Whether it's downloading a malicious app, launching a fictitious token, or sending virus emails capable of stealing personal information, users in the ecosystem need to be alert to potential sources of theft or phishing.
Errors of Use One of the characteristics that most concerns users of decentralized networks is that, due to the elimination of intermediaries, the responsibility for the service is transferred to the users. If users do not take the necessary measures to secure their finances or do not have sufficient knowledge to manipulate these assets, it may happen that they lose access to their wallets, transfer their money improperly or do not operate one of these financial services correctly.
Insider Trading And to understand how important the management of information and knowledge is in the DeFi market, one must also know that this ecosystem is vulnerable to a practice known as “insider trading” or “trading from within”. Insider trading is a risk that all markets that are just being formed run, since many creators and employees of these businesses tend to use information that they have access to due to their privileged position to make profitable investments.
Accumulation of Interoperability Vulnerabilities The DeFi market is considered one of the riskiest in the cryptocurrency community due to its volatility and accumulation of financial risks. Due to the fact that it is an interoperable ecosystem, with high composability capabilities, the operation of many of its applications depends on other tools with which it interconnects. For example, if something goes wrong with the MakerDAO protocol, lending platforms, decentralized exchanges, and liquidity pools could also be affected by the issue, since Maker underlies many of them.
Conclusion Cryptocurrencies have brought about a change in the functioning of money, as we knew it. DeFi Development Company now proposes to take this one step further and bring the different elements of the conventional banking system into a fully digital and decentralized environment. All this eliminating the need for trusted third parties, eliminating the additional costs of the conventional banking system, reducing management times and reducing tedious bureaucracy.
