Despite the growing popularity of DeFi trading, users continue to encounter significant challenges in the trading process.
The first challenge lies in the lack of Trading Tools. Trading on a DEX continues to present significant challenges and a poor user experience for traders. Managing trades and orders on a DEX is often near impossible compared to centralized exchanges. Basic functionalities such as limit orders are typically unavailable on most DEXs, and setting take profit and stop loss levels can be arduous. And automated trading doesn't really exist on a DEX yet. As a result, traders spend substantial time and money monitoring and managing their positions, and often lose the opportunity to buy because they weren’t in front of their computers.
The second challenge pertains to rug-pulls. DEX trading holds allure because any project can be listed, particularly early-stage projects that often debut on DEXs before expanding to centralized exchanges. This makes DEX trading exciting for those seeking promising gems or being among the first to invest in new tokens. However, the absence of due diligence conducted by DEXs exposes traders to the risk of rug-pulls. These rug-pulls entail sudden liquidity removal from pools, massive project sell-offs, high tax rates, honeypots, and other deceptive tactics.
The third challenge revolves around the selection of assets to buy. With the continuous influx of new projects in the DeFi space, making investment decisions, both in new and established projects, remains a formidable task. Traders are compelled to dedicate significant time to research the best tokens to purchase, determine optimal holding quantities, and decide on the appropriate timing for selling. Investing in the DeFi crypto space poses particular difficulties for investors, further exacerbating the challenge.