Decentralized Finance (DeFi)

 


Welcome Partners! 

03/04/2021

Every Day Crypto is the day-to-day discussion of hot topics , today we dive into Decentralized Finance or DeFi for short! Getting started in the crypto DeFi space can seem to be a insurmountable task with the complexity that is inherent in decentralized lending as we know it. So where do you start? As always this is for educational and informative purposes only, as I am not a financial advisor, sorry mom.



Decentralized Finance (DeFi)

What is DeFi ?

DeFi is a lending medium that exists outside of traditional lenders such as Banks or Credit Unions. DeFi allows persons to borrow against crypto assets without losing the underlying collateral. Unlike a secured credit card where your credit limit is determined by a 1 to 1 ratio of FIAT to lending power, most DeFi lenders use a process called “over-collateralization”. Depending on which DeFi service you use, you will only be allowed to borrow between 50%-60% of the total value of your assets. 

How can I join the DeFi network ?

You can join the DeFi in two ways, as a Liquidity Provider (producing assets to lend) or as a borrower. Rates vary from day to day but using a DeFi rate aggregator you can quickly check the return rates for being a provider. Below is the APY average for the last 30 days on some of the most popular crypto currencies. Stablecoins such as DAI or USDC/TUSD tend to have the highest rates with over 16% in some cases.



Compound DeFi

DeFi is the newest addition to my portfolio and represents very little of my holdings that I directly manage, BlockFi and the other services I use garner lesser APY but with a hands off approach, a trade off of simplicity for slightly diminished returns. Below you will see a test deposit I made using the Compound web application with funds from my Coinbase Wallet. Though I only deposited $ 3 USD I am currently netting about 9 - 10 % interest, and I am earning COMP as a additional bonus for providing liquidity to the market.



How can I get started with DeFi?

If you are looking for a low to no cost way to get started you can create a Coinbase account, use the Earn feature to earn over $30 in free crypto by watching educational videos and presentations, then transfer and convert your crypto into the coin you’d like to lend, with a little ETH for gas fees (transaction fees for moving crypto paid to the miners and validators) and transfer these assets minus any gas fees to compound through your Coinbase Wallet (separate app). Coinbase offered a bonus for this back in December but as of now I can’t seem to find that bonus Earn link. Alternatively you could use the Earn function and instead let Coinbase do the work for you and convert your various currencies to ATOM or ALGO and earn 5 to 6% APY without the hassle or gas fees as ETH has had a tremendous uptick in use and gas fees. 

What about other providers?

There exists a plethora of other DeFi providers. I would recommend sticking with the better known applications until you have learned how to properly investigate a project. Uniswap and AAVE are two similar platforms that allow for interest to be earned for being a liquidity provider to name a few. You can also use Kucoin’s crypto lending feature, but this is tied to the Kucoin exchange.

Referrals and Disclosures

I am not paid to recommend any of the above products, nor do I explicitly recommend blanket solutions, with your own due diligence you can arrive at which of the above tools or products would be right for you. Only you can make this choice, the Coinglomerate does however ask if you choose to use the above services to please consider using our referral links to help support us. Each link below will be transparent on if and how we would receive a referral bonus and the amount of that bonus. Thank you Partner for sticking through to the end! 

Opening a interest account with $100 or more will net you a cool $10 bonus in BTC, and we will also receive $10 in BTC. 

This is the hardware wallet I own, for those of you who are going to contributing more than a few hundred dollars into offline storage I would recommend this solution. If you decide to purchase one we would receive a 10%  BTC commission. 

This app offers up to $30 of free crypto for just learning about different projects, and you’ll receive an extra $10 of BTC when you buy at least $100, if you do this we will also receive $10 of BTC. 

Thanks for reading until the end Partner it really means the world that we are able to reach you and help you navigate through DeFi in a 101 sense. Keep on with your due diligence and you’ll be set!

If you have any questions please let me know! 

Best,
Gabriel 
Coinglomerate Partner





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