Stay vigilant: DeFi security best practices
A single lazy assumption, an unchecked contract, or a slippage setting left too wide can turn a profitable trade into an irreversible loss in seconds.
DeFi has some reliable security measures built into its very DNA (our mega DeFi Guide is a great place to learn more about this). It is open, transparent, and permissionless, after all. But while the infrastructure is robust, vigilance will always serve a trader well.
But before we start, it’s important to note: not all exchanges are created equal, and learning to size up secure marketplaces is just as important as reading a chart. Here is your guide to navigating the decentralized economy safely.
It's a golden age for DeFi scammers
Scams are as old as financial markets themselves. However, the rise of AI has ushered in a "golden age" for scammers in all aspects of financial life, including DeFi.
The decentralized nature of DeFi creates a steeper learning curve when it comes to spotting these new threats. Here are a few classic DeFi attacks-and how to protect yourself.
Phishing
Phishing attacks trick users into revealing private keys, seed phrases, or credentials by imitating trusted platforms or communication channels. With AI-generated content, these attempts are more sophisticated than ever. Fake emails, websites, and support reps can convincingly mimic legitimate sources.
Remember: wallet access is irreversible. One mistake can drain your assets instantly.
Bottom line: Always verify URLs, double-check messages, and never share private keys. Phishing remains the most common and effective attack vector in all of crypto.
Fake Contracts
Attackers often create malicious smart contracts that appear safe but are programmed to drain wallets once granted approval. Smart contracts execute immediately and immutably. Once you sign, the contract will perform whatever instructions it contains-even if that means emptying your wallet.
Bottom line: Always read contract permissions before signing. One wrong approval can compromise your entire wallet.
Liquidity Manipulation
Coordinated groups target thin liquidity pools to force dramatic price swings that exploit unsuspecting traders. DeFi markets shift quickly, and low-liquidity environments are prime targets for pump-and-dump schemes, price distortions, and arbitrage exploits.
Bottom line: Thin markets carry outsized risk. Stick to assets and platforms with meaningful volume and activity.
Common sense goes a long way with DeFi trades
One of the virtues of blockchain is its transparency. It is a tremendous mechanism for building accountability in the DeFi economy. Unfortunately, many traders don't use these facts to their advantage. Scammers are specifically looking for lazy, uninformed traders.
Here are some common-sense practices for self-protection.
Research markets before you trade
Check out the liquidity, history, and broader activity level of the assets or platforms you're about to trade.
Markets with low volume or small communities are more vulnerable to manipulation, fake liquidity, and coordinated price swings. Knowing a token's past events, major holders, and exchange listings helps you gauge whether you're entering a healthy market-or stepping into a trap.
Bottom line: Active, well-used markets are harder to manipulate, giving your trades more stability and reducing the risk of sudden, engineered price moves.
Keep an eye on your transactions
Actively review your wallet activity, contract interactions, and pending transactions using blockchain explorers.
Every DeFi action-swaps, approvals, transfers-appears on-chain. Learning how to read these records helps you spot suspicious contract calls, unexpected token approvals, or strange gas patterns before it's too late.
Bottom line: Attackers are pursuing traders who don't keep an eye out for this stuff.
Keep your slippage tight
Slippage is the difference between your expected trade price and the actual executed price. This is especially critical in AMM-based swaps.
High slippage tolerances can be exploited. Attackers embed hidden slippage into malicious contracts, and bots take advantage of volatile liquidity to extract value from your trade. If your slippage is set too wide, you may receive significantly less than expected without realizing you're being siphoned.
Bottom line: Keeping slippage tight protects your trade from being manipulated and ensures you get the price you actually intended.
Best practices for choosing a smart contract
Smart contracts are the engine of DeFi, but they are also one of its biggest attack surfaces. Whenever you interact with a contract, you are granting it permission to move or manage your assets. This makes contract safety one of the most important skills a trader can learn.
Double-check the permissions before you sign
It might sound like obvious advice, but not enough people heed it: before approving any transaction, check the permissions being requested in your wallet. Many malicious contracts disguise dangerous functions behind harmless-looking UIs.
Bottom line: If you don't understand a permission, don't sign it.
Use verified contract sources
Verified contracts make it far harder for attackers to hide malicious instructions. Always confirm that the contract you're interacting with is verified. Explorers like Etherscan make the source code publicly viewable and matched to the deployed bytecode.
Bottom line: Verified code reduces the risk of interacting with a contract designed to drain your wallet.
Check contract revisions and deployers
Attackers often create fake tokens or lookalike contracts that mimic legitimate versions. Compare contract addresses from official project websites, documentation, and trusted sources-not just search results or social media posts.
Bottom line: Always validate the contract at the source, not through links sent by strangers.
Use intent-based trading and batch auctions to keep trades secure
The strategies above rely on your vigilance. But technology can also do the heavy lifting for you.
Intent-based trading and batch auctions fundamentally change how trades are executed in DeFi. They shift the environment from one where bots react to your every move to one where your intentions are protected and executed on your terms.
By redefining how trades are expressed and how prices are settled, these mechanisms create a safer, fairer, and more efficient trading experience.
Intent-based trading
Intent-based trading lets you express what outcome you want (e.g., "sell X for at least Y") instead of submitting a raw transaction that dictates how the trade must execute.
Because your intent never enters the public mempool, bots cannot inspect, simulate, or position around your trade. For example, with CoW Protocol, your signed intent is handled by a solver network rather than being broadcast to the public mempool.
Solvers take responsibility for execution, reducing exposure to front-running, sandwich attacks, and other MEV-driven reordering tactics.
Bottom line: Your trade isn't visible to MEV bots, and solvers take on the execution risk. The result is safer, cleaner, and more predictable fills.
Batch auctions
Batch auctions group many user intents together and settle them at a single uniform clearing price.
All trades for a given token pair execute simultaneously rather than individually and sequentially. Since every trade in a batch settles at the same price, the ordering of transactions no longer matters. This removes the incentive for MEV bots to reorder your transaction for profit.
Batch auctions also enable direct user-to-user matching (Coincidences of Wants, or "CoWs"), which reduces reliance on shallow or manipulable AMM pools.
Bottom line: You get fair, uniform pricing that bots can't game. You're also able to avoid unnecessary slippage by tapping safer, more efficient liquidity.
How CoW Protocol keeps trades secure
CoW Protocol approaches trade security at the architectural level, eliminating the attack surfaces that most DeFi traders don't even realize they're exposed to.
With MEV bots watching every public transaction, CoW Protocol gives traders a fundamentally more secure execution model that removes visibility, reduces manipulation, and protects value. Here are the features designed for your safety:
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Submission via intent: Traders sign an outcome-based intent instead of sending a visible mempool transaction. Keeping trade details private removes the main attack surface for front-running and sandwich bots.
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Solver network absorbs MEV risk: Vetted solvers compete to execute your intent across all liquidity sources. They take on the execution and MEV exposure themselves, shifting risk away from traders.
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MEV Blocker / private mempool protection: MEV Blocker routes trades through a protected submission layer that keeps them hidden until the moment of inclusion.
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Surplus pricing and broad liquidity access: Solvers aggregate AMM liquidity, aggregators, private market maker quotes, and direct CoWs to find the most efficient route. This provides deeper liquidity, reduces slippage, and makes manipulation harder.
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Transparent, audited, DAO-governed protocol: CoW Protocol is open-source, regularly audited, and governed by CoW DAO with MEV-resistant design at its core.
Next steps
Security in DeFi isn't just about avoiding scams; it's about choosing infrastructure that protects you by design.
👉 Try CoW Swap to see if the protocol is right for you
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