March 29, 2024

How to Invest in DeFi with Trustee Wallet

How to Invest in DeFi with Trustee Wallet

In 2020, the DeFi market is experiencing unprecedentedhype – 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 functions, 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 beginning 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 thiswill be required.

Ways to interact with DeFi projects

  1. Investing in DeFi project tokens;
  2. 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, holderstokens  DeFi projects have the opportunity to earn significant income as a result of their price increasing in the future. Just imagine: in August 2020, the token of the MakerDao platform – MKR  increased in price by 54% compared to May of this year. 

– Impressive, isn't it?! 

Business modelearnings from purchasing tokens isthat the investor buys them for storage with the expectation that their price will increase. You can purchase the most popular tokens of DeFi projects in a few clicks using the Trustee Wallet mobile service, and you can also safely store them right there. 

As of August 2020, the service supports buying/sellingDAIfor Ukrainian hryvnia (UAH), token exchangeMakerDAO,KyberNetworkAndBancor, as well as storing a number of other DeFi tokensCompound,Balancer,AAVE EthLend.

How to Invest in DeFi with Trustee Wallet

II. Depositing funds through project sites (deposit) / obtaining loans

Business modelThe main point of investing in DeFi isin what the user (investor) contributes to  platform your crypto assets at interest and for a certain period (deposit). The system also works in the opposite direction: the user can get a loan in certain assets, leaving 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 interest on deposits in stablecoins. To deposit/receive assets from the DeFi site, simply go to the project website or download the application – not enough. 

Smart contracts of most DeFi projectswork on the Ethereum blockchain; to access these smart contracts, it is most convenient to use the Metamask plugin. It can be considered as a gateway for transferring assets to smart contracts of DeFi projects.    

Metamask – this is an application thatinstalled in the Google Chrome browser to transfer Ethereum (ETH) or ERC 20 tokens to the Ethereum blockchain network.  That is, in order to deposit crypto assets into the smart contract of a DeFi project, you must first transfer them to the Metamask balance – We will consider this process below. 

DeFi Tools and Steps

Regardless of the method you choose to receiveFor profit, it will be most convenient to use the Trustee Wallet application. As mentioned above, it allows you to easily invest in Defi tokens of projects through an exchange, and it can also be easily synchronized with the Metamask wallet. Thus, Trustee represents a gateway between the regular fiat market and the decentralized one. 

Synchronizing Trustee Wallet with Metamask 

To get started, you first need toSynchronize your Trustee assets with your Metamask wallet. Thus, when buying or exchanging crypto assets in Trustee Wallet, they will automatically be displayed in Metamask, which will significantly speed up work with any DeFi projects. 

To do this you need:  

  • Install the Metamask application in your browser;
  • In the application, click “Import using a secret phrase.”
  • Please note: if you  Metamask is already installed, then first click “exit”, and then “Import using 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.

How to Invest in DeFi with Trustee Wallet

Ready!Now Metamask is synchronized with Trustee Wallet and all 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.

We will show you how to make such a deposit using the example of a site  Compound: 

  • 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 your Compound personal account;

How to Invest in DeFi with Trustee Wallet

  • 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;

How to Invest in DeFi with Trustee Wallet

  • To create a deposit, select in the left column (Supply Market) the cryptocurrency on the basis of which we create the 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;

How to Invest in DeFi with Trustee Wallet

  • As a result, we get the created deposit, information about which is displayed on the main page of the cabinet;

How to Invest in DeFi with Trustee Wallet

  • Also, a successful deposit creation procedure 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.

How to Invest in DeFi with Trustee Wallet

When users provide assets, theyreceive a cToken from Compound in return. cTokens – these are ERC20 tokens that can be exchanged for their underlying assets at any time. As interest accrues on the assets provided, cTokens become redeemable at an exchange rate (relative to the underlying asset) that continually increases over time based on the interest rate received on the underlying asset.

Receiving loans in tokens or cryptocurrencies is similar, but the Borrow Markets column is used.

You can act on this principle with others.DeFi platforms. 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/borrow from any DeFi platform using assets that are already  are located 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.

In custody

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 provide investment advice, and the disposal of assets – It is solely your prerogative. Invest wisely and use Trustee!