General
- Here, we’ll explore 6 Key DeFi Trading Challenges and explain how DEXTools provides valuable tools for facing each.
- With DEXTools, you have the best support for DeFi trading, and we’ll keep guiding you on how to make the most of its tools.
1-Security Threats and Scams
Challenge:
- DeFi has become a hotspot for scams and security threats, especially with decentralized exchanges (DEXs). Honeypots, rug pulls, and fake tokens are common, and without proper oversight, traders can quickly lose funds. In this article we talk about the major scams and how to avoid them.
How DEXTools Helps You Face It:
- DEXTools provides a Token Information feature that verifies token details, including liquidity information, holder statistics, and contract verification.
- For example, if a trader encounters a new token, they can use DEXTools to verify its locked liquidity, an indicator of legitimacy. This feature gives traders crucial background information on each token, helping them assess risk and avoid scams more effectively.
- The Token Information feature in DEXTools is accessible through the Pair Explorer tool. Here’s how to find it:
1. Open DEXTools and connect a compatible wallet, like MetaMask, to unlock the platform’s full range of tools.
2. Navigate to Pair Explorer: In the main dashboard, look for the Pair Explorer section. This tool provides comprehensive information on each token, such as contract details, real-time price, liquidity, market cap, and transaction history.
3. View Token Information: Within Pair Explorer, select a token from trending or recent pairs to see in-depth details, including token-specific data, liquidity pool information, DEXTscore for safety insights, and even social links.
- This feature centralizes essential token insights, helping users make informed trading decisions based on real-time and historical data.
2-The Complexity of DeFi Trading
Challenge:
- DeFi trading is more complex than using traditional crypto exchanges. This complexity can be confusing for newcomers, leaving them vulnerable to costly mistakes.
How DEXTools Helps You Face It:
- DEXTools simplifies DeFi trading with an intuitive interface and helpful insights, including a DEXTscore and Audits to rate project credibility. For instance, a trader interested in trading $ETH can quickly assess various $ETH pools based on DEXTscore and other statistics. This rating system makes it easier for new traders to understand which projects are trustworthy, reducing their exposure to risk as they learn.
3-Price Volatility
Challenge:
- DeFi markets are known for extreme price volatility, with tokens often experiencing rapid price swings due to low liquidity and speculative interest. This makes it hard to execute trades at desired prices without risking loss.
How DEXTools Helps You Face It:
- DEXTools offers live, real-time data on token prices, keeping traders informed of sudden price fluctuations.
- The Price Alert feature also lets traders set alerts for specific price changes, so they don’t miss key entry or exit points. For example, if a trader is monitoring a promising new token but waiting for a particular price to buy, they can set an alert and receive a notification when the token reaches their target price, saving time and preventing missed opportunities.
- You can also use our handy Price Bot. Access here!
4-Front-Running Bots
Challenge:
- Front-running bots take advantage of DeFi transactions by placing orders ahead of traders to profit from small price shifts. This bot activity often results in slippage and losses for regular traders.
How DEXTools Helps You Face It:
- DEXTools helps traders observe large buy and sell orders in real-time. This allows them to detect bot activity and make better-informed decisions about their timing. For example, if a trader spots a surge of buy orders that could indicate bot front-running, they might delay their trade until bot activity decreases, minimizing slippage.
5-Finding Liquidity Pools with Favorable Rates
Challenge:
- Liquidity is key in DeFi trading, but finding pools with optimal rates is tricky. Low-liquidity pools often lead to high price slippage, while high-liquidity pools sometimes yield lower returns.
How DEXTools Helps You Face It:
- DEXTools includes a Pool Explorer tool that lets traders explore and compare liquidity pools across different DEXs, evaluating their depth and fee structures. Users can use Pool Explorer to compare liquidity depths and potential fees across pools, helping them choose the best option for their specific goals.
- You can also use Custom Filters feature to search for tokens based on your preferences.
6-Difficulty Tracking Multiple Portfolios
Challenge:
- Many traders diversify their assets across different wallets and DEXs, making it hard to keep track of their holdings, transactions, and profits. Managing multiple wallets without centralized tracking can lead to oversight and missed metrics.
How DEXTools Helps You Face It:
- DEXTools provides a Portfolio Tracker that integrates multiple wallets, tracking token balances, profit/loss ratios, and trading history across DEXs. For example, a trader with assets on both Uniswap and SushiSwap can monitor all their holdings in one place, gaining a comprehensive view of their portfolio’s performance. This enables traders to stay on top of their investments and make timely adjustments based on accurate, up-to-date data.
- To access the Portfolio Tracker in DEXTools, you’ll need to navigate to the “User Area” after logging into your account. This section includes the “My Positions” tab, where you can input your holdings and track their value, purchase price, and performance over time.
- This tracker is designed to make monitoring your portfolio more convenient, allowing you to keep an eye on profits, losses, and the overall return on your assets.
- In addition, DEXTools offers other features in the User Area like setting alerts, creating watchlists, and saving wallet addresses for easy access.
And that’s it!
- For more details, check here our Youtube Academy video on how to manage your portfolio on DEXTools. And here is an overview of our User Area.
Thanks and happy trading!
