DeFi staking is a great way to earn a yield on your crypto holdings, but it’s a space that requires extra caution. Rome Blockchain Labs CEO and Sceptre’s core member Alexander Szul wrote that “50% of DeFi is a scam…(kind of)” back in 2023, so you must be particularly careful when treading these waters.
This informative article will share some of the key factors to consider when choosing a secure DeFi platform for staking.
DeFi Project Reputation
Not all DeFi platforms are created equal. The quickest method to find good staking dApps is tolook for established platforms with a good reputation. Google the team or company behind the project, and see if they have a solid track record of delivering reliable projects. While reputation is not a sure-fire way to avoid scams, when used in combination with the following checks you can be more confident in your ability to avoid fake projects.
Social Media and online communities
Social media and community channels like Discord and Telegram are valuable tools to assess a DeFi platform's legitimacy. On one hand, these channels let you openly see the information that DeFi platforms put out and how involved their community is. The bad news is that scammers mimic these communities with bots and fake profiles. When communicating with team members on Telegram, double check their handle to make sure that you’re interacting with the correct profile. In the community channel, most team members will have an “Admin” or “Moderator” title in the top right of their messages. We will cover more on this below.
A blue checkmark on X.com is hardly proof of authenticity nowadays since it can be bought with little to no criteria, but there are a few signs you should look out for, like misspelled handles (like @SceptrLS instead of @SceptreLS) or accounts with the project’s name followed by the words “support” or “help”. Most DeFi projects do not have a separate customer help account, but manage everything from the default profile.
Creating a fake community on Telegram and Discord is very easy and, unfortunately, not as easy to get rid of. Look for a good ratio between members and online users in communities as a means to sort out the scam groups.. Here’s an example of Sceptre’s official account next to 2 impostor accounts. Notice how the fake communities have minimal online users despite having thousands of members:
Scammers are a byproduct of anonymous crypto and something that projects and users should always be aware of avoiding. Since Sceptre’s launch, the community has been dealing with dozens of impersonators of our platform and staff on X.com (formerly Twitter) and Telegram. If you see any accounts impersonating the projects you’re participating in, please report them. At the end of the day, they put those projects’ reputations in jeopardy, and that affects the entire DeFi community.
Interactions with the team
Legitimate DeFi projects understand the importance of fostering trust. This often involves having a team available to answer inquiries and a commitment to following core principles that promote transparency and responsible development within the DeFi space:
The team will NEVER DM you first, regardless of platform! You should send a private message first to make sure you're talking to the right person.
On X.com, the team will most likely post a warning after each post telling users not to click on anything shared after that. If a user needs a link, many projects, like Sceptre, feature a Linktr.ee in their X.com bio or website with all relevant and secure links.
On Discord, the moderator team will have their name in a unique color and their profile displays the moderator role.
On Telegram, team members have their role displayed next to their name.
Regardless of the platform you prefer, we can’t stress enough that no team member on a reputable DeFi project will ever, ever DM you first.
URL
Never click links from unknown sources, especially those promising high returns. If you’re unsure about a link’s safety, manually type the DeFi platform's official website address into your browser and make sure that website uses HTTPS. Before confirming a visit, hover over the link to verify the actual destination in the address bar. This helps ensure you're on the legitimate platform and not a copycat website trying to steal your information.
The staking process
When staking, your funds are locked in a smart contract, so after verifying that you are on the correct website, ensure that you are connecting to the proper contracts. This can be verified through comparing the listed smart contracts against the blockchain explorer.
Never send funds to an intermediary smart contract, moderator, or admin. No member from the Sceptre team or other reputable DeFi project will ever ask for your funds, tokens, or private keys.
Some DeFi platforms allow you to choose a validator to delegate your stake to. Research validators and pick one with a good uptime and commission rate.
Wallet security
Hardware wallets or air-gapped wallets are the industry’s gold standard to protect funds. If possible, always use one. If you’re taking your first steps in crypto and don’t have one, you can opt for using a reputable, non-custodial wallet, but beware of their risks and limitations.
It goes without saying that your wallet’s private security key is only meant for you and people you would want to have access to all of your funds now and in the future. Do not share it with anyone on the internet.
Additional security advice
If you're new to DeFi staking, consider starting with a small amount to get comfortable with the process and deposit more as you start to get a handle of how DeFi works.
Keep yourself updated on crypto security best practices and new potential risks. Google is your friend and there are plenty of educational resources a search away.
Finally, use anti-virus technology to scan your computer regularly for malicious programs such as key-loggers or screen recorders you may have accidentally downloaded.
Remember, DeFi is an evolving space, so it’s essential that you stay informed and stay cautious.
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