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Must-See for Beginners: How to Choose Your First DeFi Project? A Guide from Entry-Level to Avoiding Pitfalls

In recent years, decentralized finance (DeFi) has attracted global investors' attention due to its high returns and openness. However, for users who are new to this field, the plethora of projects and complex terminology in the market can often be daunting. This article will help you clarify your thoughts and start selecting a suitable DeFi project from scratch.

Step 1: Define Your Goal - Why Are You Choosing DeFi?
Before diving deep into research, first think about your core needs:
1. Seeking Returns?
- For example: Liquid Staking, Yield Farming, and other high-return directions, but you need to accept higher risks.
- Recommendation: Newcomers should prioritize projects with a risk rating of 'Low' or 'Medium' (refer to platform rating tools).

2. Concerned About Asset Security?
- For example: Custodial insurance protocols or DAO governance tools, you need to weigh returns against security guarantees.
- Must-check checklist: Has the project been audited by a third party? Is there a bug bounty program?

Step 2: Core Indicator Screening - The Three Golden Rules
1. Is the Infrastructure Robust?
Smart Contract Code Audit**
Verify code security through platforms like CertiK or ConsenSys Diligence to avoid asset loss due to vulnerabilities (for example: Poly Network lost $600 million due to a vulnerability).

Token Economics Design**
Focus on 'Inflation Rate' and 'Unlocking Period'. High-inflation tokens (like early projects) may pump in the short term, but their long-term value is questionable. Compare with competitors in the same track:
For example: Aave vs. Compound's liquidity mining reward distribution ratio differences.
2. Community Activity and Team Transparency
- Monitor the project's update frequency on social media (Twitter/X, Telegram), the response speed of official announcements reflects operational efficiency.
Team Background**: Have the development members open-sourced their past works? Do they have experience in the blockchain industry? (Reference: Etherscan's contract deployment records)

3. Liquidity and Compliance Risks
- Check whether the platform supports fiat deposits and withdrawals (Custodial Wallets are more friendly for newcomers) and the depth of mainstream cryptocurrencies.
Compliance Focus**: Is the project actively applying for licenses? For example: DeFi protocols invested by Coinbase Ventures must comply with U.S. regulatory requirements.