First step: check each protocol's smart contract audit status. Focus on protocols with recent formal verification or Certora audits. If your collateral is in an unaudited protocol, liquidation risk during volatility spikes is real.
In most jurisdictions, exiting DeFi positions at a loss triggers a taxable event, but losses can offset gains. Document exit prices now and consult a tax advisor before filing; the IRS is increasingly scrutinizing crypto tax treatment.
During the crash, stablecoins fell 5% as contagion spread. Use only USDC, USDT, or DAI for now—those backed by transparent reserves and major custodians. Avoid smaller stables until the market stabilizes.
The 39% year-to-date TVL decline means smaller yields on survivors, but higher safety margins. Compare APYs against your personal risk tolerance, not against last year's 100%+ rates that were unsustainable anyway.
Read More →