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How to avoid getting rekt in web3?

How to avoid getting rekt in web3?

August 2, 2022
3
 min read

What does it mean to get rekt? Learn how web3 beginners can avoid getting rekt while exploring the web3 ecosystem.

By: Peter

Here’s some advice on how beginners can avoid getting rekt while exploring web3.

“Rekt” means losing all your assets in crypto. To wrap up this learning path, let’s cover a few common mistakes that beginners make and how you can avoid them.

  1. Don’t put in more than you can afford to lose
  2. Manage your wallet well
  3. Start with BTC and ETH
  4. Use L2 or non-ETH L1 chains to save gas
  5. Do your own research
  6. Don’t FOMO into rapidly rising prices
  7. Don’t FOMO into crazy APYs
  8. Don’t leverage
  9. Get educated

1. Don’t put in more than you can afford to lose.

Don't put in money you need within a year or money you can’t afford to lose. Crypto is VERY volatile. You need to have a long-term mindset to avoid panic selling at the bottom.

See Why invest in crypto?

2. Manage your wallets well.

Don't give out your seed phrase to anyone - especially not to official-sounding "support" emails and DMs. Buy a hardware wallet as soon as possible, the ~$100 is nothing compared to the thousands that you could lose. 

Finally, don’t put all your assets in one wallet.

See How to use a hot wallet? and How to use a cold wallet?

3. Start with BTC and ETH.

These are "boring" but relatively safer crypto assets:

  1. L2 and non-eth L1 networks (e.g., Solana, Avalanche, and Terra) are riskier
  2. NFTs are both riskier AND more illiquid

Don't get sucked into the latest trending thing without doing your research.

See What is Bitcoin? and What is Ethereum?

4. Use L2 or non-ETH L1 chains to save gas.

If you’re looking to learn, it’s worth moving some money to Ethereum L2 and other L1 chains to save thousands of dollars on gas. 

See How to use L2 chains? and How to use other L1 chains?

5. Do your own research.

Before you invest in a new coin or NFT, do your research by:

  1. Reading primary sources such as the project’s social handles, website, and docs.
  2. Look up the founders to see if they’re doxxed or reputable people.
  3. Join the community to see if members care about the project's long-term success or are only speculating on prices.
  4. Talk to smart people about the project or search Twitter threads and blog posts.

6. Don’t FOMO into rapidly rising prices.

Let's say some coin or NFT project is pumping. People on Twitter keep talking about it. The charts are mooning. At this point, you're probably too late.

Most likely, you'll be holding the bag as early investors exit.

7. Don’t FOMO into crazy APYs.

If you're playing around with DeFi, you'll come across crazy APYs (1,000%+). Try to understand WHY the APY is so high first before doing anything.

8. Don’t leverage.

Leverage means borrowing some crypto to invest in other crypto. If you're a beginner, just don't do it. You have no idea what you're doing, and leveraging is the quickest way to get liquidated.

9. Do get educated.

Yes, the best way to learn in crypto is to just do stuff. But try to understand what you're doing first.

The best place to start learning is (you guessed it) by reading our learning paths on NFTs, DeFis, and DAOs.

Let's cover those paths at a high level next.

Up next: Where to explore more?
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