Top Security Features to Look For in a DeFi Wallet

Private keys serve one main purpose in a DeFi wallet – they give you full control over your funds. However, this greatly depends on the wallets you choose to trust with your funds. There are two main types of wallets; non-custodial and custodial. 

In non-custodial wallets, you are the only person who has access to your private key and you are also directly responsible for the security of your assets. In custodial wallets, however, a third party holds your private key which it can use to access your funds.

By now, you must be clear on the wallet you want to select. If it is custodial, you are not the only person with access. If it is non-custodial, there is a downside to it – the risk of losing the private key. No private key, no access to funds. However, there is a solution to this problem. You can always rely on backup solutions such as seed phrases and hardware wallets. These are the tools designed to keep your financial security intact and in check.

2. Multi-factor authentication (MFA) & biometric security 

Multi-factor authentication (MFA) and biometric security are integral parts of the DeFi ecosystem. MFA makes security super strong by asking you multiple forms of verifications before it grants you access to funds. How it works is that it combines a password, remembers a mobile phone or a security token and even adds your biometrics to the system to provide you enhanced security. This layered approach of MFA makes it tricky for hackers to hack into your account and helps secure your funds. 

When it comes to the role of biometrics, they always rely on unique facial features such as fingerprint and facial recognition. This is because your fingerprint and face are difficult to replicate so biometrics are like an added layer of security. Biometrics integration fights strongly against unauthorized access.

These features combine to protect your DeFi wallet from getting hacked and your funds from getting stolen. Biometric security and MFA merge to create a uniquely robust defense system.

3. Smart contract audits & open-source code 

DeFi wallets with audited smart contracts are equally crucial. Smart contracts are self-executing and they are prepared and curated using code. A code can have bugs and it may not serve the same function it is designed for. When a smart contract is audited, the report shows all the inefficiencies within it. This helps resolve issues within a wallet. 

If you opt for open-source DeFi wallets, you don’t have to wait for a smart contract audit to see the overall report of your wallet. This is because open-source wallets allow for community verification. This means that if there is a bug in a smart contract, it can be addressed then and there, reducing the overall risk. 

Closed-source DeFi wallets, however, have hidden vulnerabilities and there is an overall lack of transparency which can put your funds at risk.

4. Anti-phishing protections & scam alerts

DeFi wallet scams and phishing attacks are super common tactics used by attackers to trick users into giving away their credentials to access their funds. These are done by luring users into clicking deceptive links or visiting fake websites that look exactly like legitimate platforms. 

Today, many DeFi wallets have built-in phishing and scam alerts that flash every time there is some fishy and malicious activity. Many wallets also have transaction previews which are there for you to double-check whether you want to make the transaction. It is super useful. 

It is important to always verify URLs, and download wallet apps from trusted sources only. 

5. Hardware wallet integration

A hardware wallet integration in a DeFi wallet can be a game-changer for you as a user. Some examples of hardware wallets are Ledger and Trezor. You can look up more options and choose the best one. 

Hardware wallets are usually used as a backup to store private keys. What they do is that they add another layer of top-notch and reliable security to your existing wallet. 

They are difficult to hack because they are not digital. Unless you lose your hardware wallet, which is highly unlikely, it stays miles out of hackers’ reach. Lastly, as mentioned, they keep your private offline, preventing all sorts of hacking attempts.

Conclusion 

In conclusion, it is important to look for these features when trusting a DeFi wallet with your hard earned money – the wallet is non-custodial, it has MFA and biometrics security, the smart contracts are regularly audited, it has scam and anti-phishing alerts and it allows for hardware wallet integration. 

Users must always stay cautious and use best practices despite considering the aforementioned factors. Lastly, users should also keep an eye out on wallet updates and security advisories.

If you’re looking for the latest DeFi security features, you don’t have to look further. Meet BlockGuard. BlockGuard is a decentralized finance ecosystem built for security, scalability, and easy asset management. It features the BlockGuard Network (BGN), a Layer 1 blockchain with EVM compatibility, zero-knowledge proofs, and on-chain 2FA. Its Fusio suite includes Fusio Wallet for secure transactions, Fusio Portfolios for diversified investments, and AI-powered tools for smarter financial management.

FAQs 

Which method ensures a high level of security for a crypto wallet?

Multi-factor authentication (MFA) ensures a high level of security for a crypto wallet.

How do I protect my DeFi wallet?

By using strong passwords, enabling MFA, storing the private key in hardware wallets and verifying using biometrics. 

How secure is a DeFi wallet?

It depends on the type of the wallet and how a user is managing the wallet. There are very safe and secure wallets and not so secure wallets as well. 

What are the vulnerabilities of DeFi?

These include smart contract hacks and bugs, phishing attacks, private key security risks, etc.