Too easy for scammers to drain the funds of a protocol. Once funds are transferred, the transaction is final. Not really a drawback unless you made a mistake and sent the wrong amount or wrong currency. Laws being constructed to impose fear while the regulators figure it out deterring new users and developers.
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A big drawback if this happens. Totally agree.
Mistakes cannot be undone.
And yeah, friends donât listen.
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Protocols are vulnerability to hacks
Another drawback is the fact that this industry is still at the very early stages, it requires a bit of knowledge for the average person to be able to use it, and even with some knowledge you can still get burnt a few times. I appreciate how you encourage people to use the testnet first, itâs a great way of familiarizing yourself with any protocol.
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Loopholes in smart contract can be well exploited by scammers and hackers that can result to loss of enormous wealth with that you donât have any customer service to get back your money. So that money is lost forever
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Yes itâs still in inception phase and any change in regulation and system will result in studying the whole system again and planning the same
Security of wallets and transactions from loss, hackers and scammers
Bogus coins, tokens and platforms
Exploits in code of contracts
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I like the idea of using the testnet too, only just been getting involved and its a lot of fun with no financial risk.
One of the biggest drawbacks to the whole system right now is how new it is. Meaning that itâs susceptible to all sorts of problems which will eventually get figured out, but for now include stuff like:
- unforeseen security vulnerabilities
- irresponsible/short-sighted government regulation proposals
- hurdles to adoption based on lack of knowledge/propaganda (âBut, but, but âŚcrypto is terrible for the environment!â etc etc)
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Iâve noticed that friends only listen when you can explain it in the simplest possible terms, like how youâd explain something to a child. A lot of people see the whole space as opaque and unapproachable simply because they donât understand the most fundamental concepts of the technology.
As everyone has said that first entry hump is big , tech, finance, software ,coding, accounting and completely new models of finance based on the tech i.e flashloans, itâs more effort than most want to invest. As josh mentioned likely a divide between pure defi and highly compliant access via Cexâs.
One big drawback is faulty code that has yet to be found out. This was recently caught on the Matic network and, because it was a white hat that found it, saved billions from being stolen from the project
not to mention they can follow that and make reasonable assumptions on other wallets you hold as well. =[
DeFi being a decentralized ecosystem is a big challenge for regulation. Itâs borderless nature poses questions like whoâs responsible for investigating financial crimes. Also banks and corporations will find ways to get into the system, to control how we access our money or to make money from the system.
Great points Attiss. I really hope these hurdles get eventually sorted out without affecting the benefits that DeFi offers to the world.
For me personally, the drawback is the regulatory uncertainty (though that doesnât apply just to DeFi, but to the whole crypto space). Right now, I live in a country with literally no tax regulations (unless you trade and swap a lot everyday, or if you make huge profits - what that is, is not specified), however, if that changes, Iâm sure there will be a lot of confusion, what is taxed, how, when, and with DeFi and yields updating every minute, it might become a pain in the somewhere.
Answer: As immutable concept, once the blockchain has critical bug, that contract canât modified.It hard to avoid big loss.It need to plan money management stategy and proxy contract.
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It is a new industry and greedy people can get advantage to others.
One more drawback is, that it´s still difficutl for beginners to seperate the good from the bad projects. Especially when you don´t know which sources really brings you high quality content.
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