I've been thinking about a question lately: when many people enter the crypto market, they often struggle with a choice—should they use an exchange wallet or set up their own DeFi wallet? These two methods are actually quite different.

Speaking of DeFi wallets, simply put, they are non-custodial wallets where you hold your private keys. The biggest difference from exchange wallets is that you truly own your assets. DeFi wallets allow you to participate in various innovative market opportunities, such as trading NFT art, engaging in some new derivative projects, and even supporting certain DeFi protocols. Sounds pretty free, right? It definitely is.

But here’s the problem. The volatility of the crypto market can really keep people from sleeping well. I’ve seen too many people panic over sudden events and then cut their losses at the market bottom. Market fluctuations not only mean your asset value can plummet sharply, but if you have collateralized positions in DeFi protocols, the volatility can directly affect your collateral value, increasing the risk of liquidation. Even more painfully, if you’ve taken out a loan, a market crash could suddenly make your repayment pressure much heavier.

That’s why many people are very cautious when using DeFi wallets. You need to truly understand what you’re doing because no platform is protecting you behind the scenes. Compared to exchanges, DeFi wallets give you complete autonomy, but also mean full responsibility. Market risks, technical risks, human operational errors—all must be borne by yourself.

So if you want to participate in the market with a DeFi wallet, the most important thing is to first understand your risk tolerance and not get carried away by FOMO. Rational analysis, moderate allocation, continuous learning—these are the keys to surviving in a volatile market.