DeFi 101: Wallet safety tips

Ideally, both.

If you have a cold wallet, you will need a hot wallet to interact with DeFi applications.

You can use just a hot wallet, but for safety, a cold wallet is generally better.

Ideally, you want to split your assets between a few wallets.

If you plan on yield farming with $10-$100k+, I would advise you to split your funds between a few wallets.

Let's assume that you have $100k in crypto, I would argue that having 5 wallets with $20k each is good. It's really up to you. You could even buy 10 wallets.

You can then say that 1 wallet = 1 strategy or 2 strategies, so your funds are diversified. Again, this really depends on your risk profile.

If your wallets gets compromised, at least you won't lose your entire crypto portfolio.

If you lose your wallet, or it gets stolen, or broken, they won't be able to do anything without your password.

If this happens, you will have to use your seed phrase to access your funds again, so do not lose it.

You can use a hot wallet. But I would definitely recommend a cold wallet.

If you're new to crypto and DeFi, using a hot wallet is fine to practice and see whether you're into the whole DeFi stuff.

Use the official manufacturer's website.

Do not buy second hand wallets. You do not want to be cheap here. If you're going to farm stablecoins with $100k, a $50 wallet represents only 0.05%. You will make it back very quickly with yield farming.

A cold wallet is safer than a hot wallet because it stores private keys offline.

Yes, if you approve a malicious transaction, a cold wallet won't help.

You need to be very careful.

Thankfully, a cold wallet tends to mitigate your FOMO if there's an airdrop announcement or a very time sensitive activity.

Honestly, no. The main disadvantage of a cold wallet is that you must physically connect it to your computer or phone, and making transactions is generally a bit slower because you need to approve them on your hot wallet, then on your cold wallet.

Most cold wallets are pretty small and can be put in your bag. Obviously, don't show your cold wallet to anyone at the airport.

It's really up to you, but if you're gone for a few days, do you actually need to take it with you?

If the answer is yes, do not show your cold wallet in public. Do not talk about crypto to people. Do not connect to a public WiFi.

I would recommend either a Ledger or a Trezor (referral links). The cheapest ones are around $50 and are more than enough.

Never store your seed phrase digitally.

Always use either the recovery sheets, or something like the Cryptotag I mentioned above.

Ideally, you want to split your seed phrase in two parts. For a 24 words seed phrase, use one recovery sheet for the first 12 words, and an other one for the remaining 12 words.

You can then hide these 2 sheets in different places.

Ideally, this shouldn't happen. But maybe you hid it somewhere and you can't find it anymore... Or your house burned down.

If you lost your seed phrase, you should create/buy a new wallet and send your funds on the new wallet. Your old wallet should not be used anymore.

Ideally, no.

If your house burns and you lose both your cold wallet and seed phrase, you're screwed.

You can open a safe deposit box at a bank.

You can store them at your parents place.

The seed phrase recovery sheet is very easy to hide. It fits basically anywhere. Be creative, but don't forget where you hid it. Ideally, you want to split your seed phrase in 2 parts (or more), and hide the two parts in different spots.

Ideally, create a new wallet and empty your old one. You never know what can happen, and taking precautions is better than loosing your funds, right?

Create a new wallet, and send your funds there. If your seed phrase is compromised, the people who have it can steal all your funds.

You could, for example, set up what we call a multisig. A multisig means that multiple people/wallets need to validate a transaction.

If you're going to yield farm, I wouldn't really recommend it, but it's an option.

Yes, you can. I wouldn't necessarily recommend it though.

Ideally, yes.

You want to have a computer specifically for crypto. It doesn't have to be a very powerful computer. Just a device that you use only for transactions.

No social media, no emails, no youtube, no scrolling. Just crypto transactions.

Ideally, yes.

It doesn't mean that you should put this email address everywhere, because a lot of scams target crypto users. I have a junk email address and somehow it's now filled with spam emails.

Always be very careful when you receive an email or if you're somehow eligible for an airdrop.