Investing in Defi poses some unique risks compared to traditional finance. These risks are mostly centered around irreversibility of transactions, software risks, scams, and unknown future regulation.
Utilization refers to how much of a lending pool is currently lent out to traders. If utilization gets to 100% lenders will have to wait to withdraw their money. Interest rates are used to lower utilization and enable withdrawals.
Choose a coin that you plan to invest in anyways because you'll have to hold the coin first in order to lend it out. To decide which coins to invest in one framework is to think through if you think it has a legitimate use that will make it both scarce and highly demanded.
Divergence loss is a normal part of providing liquidity and is helpful to understand when evaluating which coins to provide liquidity for.
Liquidity refers to how easy it is to convert one cryptocurrency coin into another. If there are lots of buyers and sellers for a particular coin it is liquid - it'll be easy to trade. If there are few buyers or sellers it will be illiquid or difficult to trade.