You can no longer ignore DeFi opportunities

You can no longer ignore DeFi opportunities

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Jonathan
Jonathan

An editor at Coincrop


25 Jan 2022 | 9 min read
36,914 views

Y

ou can’t! Seriously, there is just too much opportunity in the decentralised finance space. Sure, it can be overwhelming and complex but it’s well worth exploring.

In this guide:

Disclaimer: All of the information written on Coin Crop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.

Hodling is no longer enough

The cryptocurrency market is like a constantly moving target – sure, you can purchase a basketful of tokens and forget about that for 2 years in the hope that they will massively appreciate in value. That investing approach might have worked several years ago when Bitcoin was in its infancy but today its far less likely to work. Today, investing requires an active rather than passive approach.

You only have to look at the tokens that were popular in 2014 – few of them maintained that popularity in 2022. In same ways, the cryptocurrency market share many similarities with the ‘dot-com bubble’ of 1995 to 2001. There was a frantic rush to market of thousands of internet businesses – many failed but out of those failures came the likes of Amazon and Netflix. There is no doubt that the same will happen in cryptocurrencies.

What is DeFi?

OK, let’s start with the acronym as that’s the easy bit – DeFi stands for decentralised finance. The goal of DeFi developers is to recreate the financial system on the blockchain.

Key to DeFi are smart contracts – essentially small computer programs that exist on the blockchain. These smart contracts can be programmed to perform a variety of tasks. These tasks include asset conversion, lending, earning etc.

By using smart contracts we can remove the need for a third party that may interfere in the transaction. Users can trust that the smart contract will execute their transaction in a logically programmatic manner without fear of the transaction being queried by an overzealous bank.

The first of the DeFi products began on the Ethereum blockchain. As technology has evolved (in part to address the limitations of Ethereum), new blockchains have emerged such as Avalanche, Binance Smart Chain, Solana etc. - these protocols promise faster transactions with lower gas (transaction) fees.

For many people, the view of crypto is Bitcoin – buying and holding the single number 1 asset for future profits. Whilst that is an admirable approach, its unlikely to generate the past growth that people think of when they see Bitcoin. Certainly if you’re looking for a high return in a much smaller time frame, you need to be embracing technologies such as DeFi and the staking and yield farming opportunities within.

DeFi is for everyone – unlike centralised exchanges there are no registration or KYC processes – anyone can participate regardless of jurisdiction (yes, some DeFi exchanges block U.S. users but most commonly used VPNs will workaround this minor limitation).

The exit liquidity mistake

There is a thought in the crypto community that once a token makes its way onto a centralised exchange (CEX) then you are too late. The argument goes that the huge exponential growth, the x100 growth, comes early on in the launchpads or decentralised exchanges.

Centralised exchanges are reluctant to list newly issued tokens until they have some history – the projects need to prove themselves. These exchanges are all too wary of so-called ‘rug pulls’ in which project founders run off with the liquidity held in the projects.

By investing in early projects that are only listed on decentralised exchanges, you increase the chances of picking the next x100 winning project.

How do I get started?

Many people are put off from trying DeFi because of the technology learning curve. Certainly the software isn’t as user friendly as it could be but that is unsurprising given the early nature of the technology – in time that will change.

Interacting with a DeFi project always requires a wallet of some kind. The MetaMask browser extension is one of the most commonly used – it’s not particularly user friendly but it works. Your wallet will need funding with tokens that can be used to interact with the DeFi exchange – these are typically obtained from a centralised exchange such as Binance.

Our DeFi favourites

Below we have picked several of our DeFi favourites. They operate across a variety of blockchains – each with different benefits and capabilities.

SushiSwap

SushiSwap functions across a variety of popular blockchains such as Ethereum, Polygon, Avalanche, Binance Smart Chain etc. Below are some popular rates for earning from yield farming:

AssetTermsAPY Rate

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

477,994%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

261,856%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

206,573%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

147,944%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

27,407%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

25,093%

+

Kebab Token (KEBAB)

+ Pancake Bunny (BUNNY)

Flexible

8,010%

PancakeSwap

PancakeSwap only works on the Binance Smart Chain blockchain but occupies a significant portion of the DeFi market. Below are some popular rates for earning from yield farming:

AssetTermsAPY Rate

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

477,994%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

261,856%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

206,573%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

147,944%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

27,407%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

25,093%

+

Kebab Token (KEBAB)

+ Pancake Bunny (BUNNY)

Flexible

8,010%

Raydium

The Raydium decentralised exchange operates on the Solana blockchain. Below are some popular rates for earning from yield farming:

AssetTermsAPY Rate

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

477,994%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

261,856%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

206,573%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

147,944%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

27,407%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

25,093%

+

Kebab Token (KEBAB)

+ Pancake Bunny (BUNNY)

Flexible

8,010%

Pangolin

Pangolin is a very new but promising decentralised exchange operating on the incoming Avalanche blockchain. Below are some popular rates for earning from yield farming:

AssetTermsAPY Rate

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

477,994%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

261,856%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

206,573%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

147,944%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

27,407%

+

Biswap (BSW)

+ Alpha Finance (ALPHA)

Flexible

25,093%

+

Kebab Token (KEBAB)

+ Pancake Bunny (BUNNY)

Flexible

8,010%


Jonathan

Jonathan

An editor at Coincrop
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