1. Is DeFi legal for UK investors?
Yes, it is possible to invest in DeFi protocols, but the stream of new regulations continues to flow. It is important to know the tax obligations and the legal frameworks surrounding an issue.
2. How do I access these DeFi platforms?
The first step is to use a crypto wallet (MetaMask, for instance) to connect to DeFi protocols via their websites or dApps.
3. Can I earn “interest” in DeFi like a bank savings account?
Yes, there are ways to earn yield by supplying assets to lending platforms (like Aave) or being a part of liquidity pools. However, returns are more volatile than those of traditional savings.
4. Is staking safer than yield farming?
Staking could be more predictable (e.g., via Lido), however, it is still not a totally risk-free option. On the flip side, yield farming strategies can guarantee higher returns but carry a similar level of risk.
5. What happens if a DeFi protocol has a bug?
Smart contract bugs can be expensive. Thus, using audited protocols and taking measures like insurance or diversified exposure is a good way out.