Handewitt, Germany, July 29, 2021 (GLOBE NEWSWIRE) — The Decentralized Finance world is one of the most outstanding financial revolutions of the 21st century. Generally, with DeFi, everyone globally can take charge of their finances and investments while benefiting from other services like lending, gaming, etc. SolidProof specializes in auditing smart contracts to find vulnerabilities in a blockchain project using manual and automation testing, which helps boost investors’ trust.
However, the trust in DeFi is still lagging; thus, the adoption is also lagging. The primary reason for the lagging confidence in DeFi has always been about its bad. Generally, as a product of the crypto world, DeFi is always blamed for the issues associated with cryptocurrency. Since some KOLs still view crypto as a scam, DeFi suffers the same fate.
Fortunately, there are ways to help bolster the trust in DeFi, including audits and KYC procedures.
How Audit and KYC strengthen DeFi Projects
How do KYC and Audit projects strengthen confidence in the DeFi world? Here is a short guide.
1. Audit Proves That a DeFi Project is Genuine
One of the significant ways that KYC and Audits bolster trust in DeFi is by proving that a project is genuine. Scams connected to the crypto world have been soaring, with investors losing fortunes to fake schemes. However, how do these scams happen?
Some developers may introduce a project with the primary intention of stealing from unknowing investors. Generally, these kinds of projects promise to offer high yields and could easily attract investors. Due to such scams, some investors could easily lose trust in DeFi.
However, by using the KYC and Audit procedures, investors will now start trusting DeFi-related projects. The auditor can know if a particular project is genuine or not. In some cases, the auditor may do deep research, including looking at the following;
Coin Minting mechanism
Team behind project
By doing thorough analytics of the above mentioned, the auditor can assure investors that the new DeFi project is genuine.
2. Real Tests
Another reason why audit and KYC platforms contribute to bolstering trust in DeFi is the real tests done. Smart contracts involve codes that are very complex for a person with no coding knowledge to understand. Therefore, it may be impossible for any investor to do an audit of a project before investing.
However, smart contract audits have for some time now been an industry standard. The smart contract system auditors include a group of people with coding experience. The auditors apply autonomous tests on the system to see how it reacts to different scenarios of transactions.
Furthermore, the auditors include manual tests to see if the results are consistent with the autonomous ones. The applications of real tests make their reports more valid and dependable to the DeFi investors, thus increasing trust in the DeFi industry.
3. Audit Projects Give Recommendations
Read More: finance.yahoo.com