Problem for Web3 investors

For Web3 investors or liquidity providers, they face several challenges and pain points that can impact their investments and overall experience in the market. Here are some of the top issues:

Market Volatility

• Extreme Price Fluctuations: Cryptocurrencies are known for their high volatility, with prices capable of swinging dramatically within short periods. This can lead to significant gains or losses​.

• Emotional Stress: The volatility can cause stress and emotional decision-making, leading to potential investment mistakes.

Security Risks

• Hacking and Fraud: Crypto exchanges and wallets are frequent targets for hackers. Security breaches can result in the loss of funds​.

• Scams and Phishing: The prevalence of scams, phishing attacks, and fraudulent schemes in the crypto space poses a constant risk to investors​​.

Regulatory Uncertainty

• Lack of Clear Regulations: The regulatory environment for cryptocurrencies is still evolving, leading to uncertainty about legal and tax implications​​.

• Government Crackdowns: Sudden changes in regulations or government policies can impact the market significantly, causing price drops or restrictions on trading and usage.

Complexity and Technical Knowledge

• Understanding Technology: The technical nature of blockchain and cryptocurrencies can be challenging for new investors to understand, making it difficult to make informed decisions​.

• Managing Private Keys: Properly managing private keys and wallets is crucial for security, but can be complex and prone to user error​​.

Liquidity Issues

• Market Depth: Some cryptocurrencies suffer from low liquidity, making it difficult to buy or sell large amounts without affecting the market price​​.

• Price Slippage: In markets with low liquidity, large trades can lead to price slippage, where the execution price differs from the expected price.

Lack of Investor Protection

• No Insurance: Unlike traditional bank accounts, crypto holdings are generally not insured, which means investors can lose all their funds in case of a security breach or platform failure​.

• Limited Legal Recourse: Recovering lost or stolen funds can be difficult due to the pseudonymous nature of cryptocurrencies and lack of legal frameworks​.

Market Manipulation

• Pump and Dump Schemes: The relatively unregulated nature of the crypto market makes it susceptible to manipulation, including pump and dump schemes​​.

• Whale Influence: Large holders, known as whales, can significantly influence market prices through their trades.