In 2020, the DeFi market is seeing an all-timehype - in August, the total amount of funds on the sites exceeded $ 6 billion. During this time, some cryptans not only successfully figured out how this system works, but also received income. According to financial analysts, the market's potential has not yet begun to unfold; many compare its current state with the start of the ICO boom in 2017.
The Trustee Wallet team has already discussed in detail the topic of what DeFi is, now it's time to talk about how you can make money on the DeFi market and what tools for this will be required.
Ways to interact with DeFi projects
- Investing in DeFi project tokens;
- Depositing funds through project sites (deposit) / obtaining loans.
I. Investment in tokens of DeFi projects
Many DeFi projects issue their own tokens: MakerDao - MKR, Synthetix - SNX, Kyber Network - KNC, Compound Finance - COMP.
The issue of own tokens has several goals:
- minimizing the risks of the main coin (such as the Dai stablecoin in the MakerDao project)
- creating a community of holders for making decisions and innovations on the platform
- attracting new users and interest in the site.
Along with intangible rights, token holders DeFi projects have the potential to generate significant income as a result of their future price increases. Just imagine: in August 2020, the MakerDao token, MKR, increased in value by 54% compared to May this year.
- It's impressive, isn't it ?!
Business model earnings from the acquisition of tokens arethe fact that the investor buys them for storage with the expectation of an increase in their price. You can purchase the most popular DeFi project tokens in a few clicks using the Trustee Wallet mobile service, and you can safely store them right there.
As of August 2020, the service supports buy / sell DAI for Ukrainian hryvnia (UAH), token exchange MakerDAO, KyberNetwork and Bancoras well as storing a number of other DeFi tokens Compound, Balancer, AAVE EthLend.
II. Depositing funds through project sites (deposit) / obtaining loans
Business modelinvesting in DeFi is mainlyin the fact that the user (investor) deposits his crypto assets on the site at a percentage and for a certain period (deposit). The system also works in the opposite direction: a user can get a loan in certain assets, leaving a collateral in cryptocurrency.
Specific conditions for investing / obtaining loans, interest rates, terms, etc. are spelled out in smart contracts of each of the projects. They are usually public and can be verified by users.
The most famous platform in this area isthe Compound project, which provides the highest percentage of the deposit in stablecoins. To deposit / receive assets from the DeFi site, simply go to the project website or download the application is not enough.
Smart contracts for most DeFi projectswork on the Ethereum blockchain, it is most convenient to use the Metamask plugin to access these smart contracts. It can be seen as a gateway to transfer assets to smart contracts for DeFi projects.
Metamask is an application thatinstalled in the Google Chrome browser to transfer Ethereum (ETH) or ERC 20 tokens to the Ethereum blockchain. That is, in order to add crypto assets to the project's DeFi smart contract, you must first add them to the Metamask balance - we will consider this process below.
DeFi Tools and Steps
Regardless of the method you choose to receivethe most convenient way to use the Trustee Wallet app. As mentioned above, it can easily invest in Defi project tokens through an exchange, and it can also be easily synchronized with the Metamask wallet. Thus, Trustee is a gateway between the regular fiat market and the decentralized one.
Synchronizing Trustee Wallet with Metamask
To get started, first of all, you needsync your Trustee assets with your Metamask wallet. Thus, when buying or exchanging cryptoassets in Trustee Wallet, they will be automatically displayed in Metamask, which will significantly speed up work with any DeFi projects.
For this you need:
- Install the Metamask application in your browser;
- In the application, click "Import using a secret phrase".
- Please note: if you already have Metamask installed, then first click "exit" and then "Import using a secret phrase".
- We enter our seed phrase from the Trustee Wallet service (a sequence of 12 words, which is your private key) and come up with a password for quick access to Metamask through a browser.
Done! Now Metamask is synchronized with Trustee Wallet and all the assets that are on the Trustee Wallet balance can be used in Metamask to participate in DeFi projects. Now you can easily invest or get loans.
Making a deposit on the DeFi platform
Let's imagine that you have decided to transfer your fiatfunds in DAI or USDT cryptocurrency and at the same time create a deposit through the DeFi platform. Thus, you give your funds to another user on credit, which he undertakes to return within a certain period of time, with an agreed percentage.
Let's show how to make such a deposit using the Compound site as an example:
- We go to the Compound website, in the upper right corner we see the "APP" button, click on it and connect with the Metamask wallet to the Compound personal account;
- The account has all the information about our deposits,as well as interest rates on deposits in different cryptocurrencies. As you can see in the picture, on the left are interest rates for deposits, and on the right for loans (loans). It also shows the funds that we have on the balance of the wallet;
- To create a deposit, select the cryptocurrency in the left column (Supply Market), on the basis of which we create a deposit - in our case USDT;
- We indicate the amount of the deposit in USDT and confirm the creation of a smart contract with the corresponding transaction;
- As a result, we get the created deposit, information about which is displayed on the main page of the cabinet;
- Also, a successful procedure for creating a deposit will bedebiting your funds from the address balance and crediting cToken'a instead. In our case, cUSDT came instead of USDT, this will be visible both in the Metamask wallet and in the Trustee Wallet.
When users provide assets, theyget a cToken from Compound in return. cTokens are ERC20 tokens that can be exchanged for their underlying assets at any time. As interest accrues on the assets provided, cTokens are redeemed at an exchange rate (relative to the underlying asset) that continually increases over time depending on the interest rate received on the underlying asset.
Receiving loans in tokens or cryptocurrencies is similar, but the Borrow Markets column is used.
This principle can be used with others.DeFi sites. The interface may be different, but the logic and order of actions are the same. Since the Trustee and Metamask wallets are already synced, you can invest / receive loans from any DeFi platform using the assets already in your Trustee wallet.
It should be noted that at different DeFi sitesinterest rates for deposits and loans differ, and the list of available assets also differs. The most convenient way to track interest rates on assets is through the LoanScan service, which always contains up-to-date information.
So, investing in any DeFi projects, creating deposits or getting loans is very simple: for this you just need to install the Trustee Wallet and follow the steps listed above.
Please note that we do not give investment advice, and the disposal of assets is solely your prerogative. Invest wisely and use Trustee!